Fuel Subsidy Is Gone- President Tinubu

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No sane government should watch its citizens suffer untold hardship and live in poverty.

The primary responsibility of government is to protect the life’s and to secure the welfare of the people.

President Ahmed Bola Tinubu spontaneously announced the removal of fuel subsidy on the day of its inauguration without considering the attendant consequences of such a decision.

In fairness to the removal, the amount of money claimed to be payment of subsidy in Nigeria was quite humongous from N300 billion during the Good Luck Jonathan administration in 2012, to N2.7 trillion in 2022.

However, beyond the doubt as to the authenticity of the real value paid on subsidy, the secrecy and corruption associated with the entire subsidy regime was very un-palatable.

It was as a result of this, that many Nigerians canvassed for the removal of subsidy.

Nevertheless, there are some other school of thought who believes that the government was not sincere on its own part due to the lack of transparency and accountability in petrol consumption and subsidy payment.

Also, even where several reports indicting subsidy saboteurs were released, the federal government did nothing to investigate and prosecute those who were accused of corruptly enriching themselves from the subsidy payments.  Therefore, the payment of subsidy on its own was not the problem but the willingness of government to come clean with its transaction on subsidy payment and muster the political will to pervert corruption amongst the stakeholders was the major problem.

The view on re-introduction of subsidy becomes necessary given the fact that payment of subsidy is a common global practice by governments all over the world. It is taken to ameliorate hardship faced by majority of citizens in the purchase of very expensive commodities. In this case, Nigeria being a mono-economy driven by sales of crude oil, has made the price of every other commodities reflective in the rise or fall in the price of crude oil.

The subsidy regime cushioned a lot of hardship amongst Nigerian in the past and with its removal today, Nigerians have not been able to recover from the effect, as we can witness the continuous increase in the prices of all commodities in Nigeria. Most workers do not report to work on a daily basis, some business closed shops and the general standard of living has reduced. Couple with this fact, is government inactiveness in controlling the hike in the prices of locally produced commodities.

The lack of a price stabilization and mechanization control which was hitherto implemented in the 70’s have made it possible for middle men to determine the prices of commodities in the market.

The practice of the middle men is to acquire these goods from the dealers and hoard them so as to create scarcity and speculate a market price before they sell, with wide profit margin. If government enforce the price control Act as ordered recently by the federal high court on goods and commodities that are locally produced in Nigeria, the hoarders and speculators would run out of business and food items and other commodities would be available at the normal rate.

The lack of a price control mechanism is what led to the failure of most government policies on agriculture. It is so unfortunate that the past government of President Muhammed Buhari, made efforts to encourage local production of food commodities such as rice and even provided subsidies to farmers to embark on local rice production, but instead of having the price of rice reduced, it rather led to more than 200 percent increase in the price of rice. Rice which was sold for N9600 before the ban on imported rice, skyrocket to N19,800, at a point, it rose to N36,000 and the government could not do anything to stop the hike. Under this present administration, a bag of rice sells for N77,000.

It is an anomaly for government to provide incentives to local producers of commodities and at the same time, do not have control of the market price.

In light of the above, in the interim, the Federal Government should re-introduce subsidy on petrol and diesel under a more transparent regime and deal with saboteurs who divert the products to other countries and in the long run, the Federal government should get our refineries working at optimum capacity so that any attempt to remove subsidy on petrol and diesel will not have much impact on the price on petrol.

Also, a list of commodities and items produced locally should be established and the market price should be determined under a price control, stabilization and mechanization regime.  The government should enforce the laws and policy on price control. Finally, for resource mobilization, the government should stop oil theft so that more resources can be generated from crude oil and this would help us pay for the subsidy on petrol and also pay for the functionality of our refineries.


Victor Emejuiwe
Monitoring and Evaluation/Strategic Communication Manager
Centre for Social Justice.

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