Fuel subsidy is popular with ordinary Nigerians who regard it as a rare benefit of the country’s oil wealth.
has picked a battle that many Nigerian leaders, military and civilian, in the past 30 years fought and lost in one way or another. At his inauguration on 29 May, Mr Tinubu, 71, announced the total removal of “fuel subsidy,” saying the scheme has “increasingly favoured the rich more than the poor.” He added that the subsidy could no longer justify its ever-increasing costs in the wake of drying resources.
Following the promulgation of the Price Control Act in 1977, fuel subsidies became institutionalised which made it illegal for some products to be sold above the regulated price. This law was introduced by the Olusegun Obasanjo military regime in order to cushion the effects of the global “However, the cost of subsidising petrol has ballooned over time and riots have broken out merely over rumours of any increase in the past.
The subject also gained a legal imprimatur with the passing of the Petroleum Industry Act , whose express purpose was to introduce a legal and governance framework to guide activities in the oil and gas sector. In many parts of Nigeria, petrol is diverted to the black market before it is even delivered cheaply to the pump. Because Nigeria’s refineries are barely functional, the country is forced to sell its unprocessed stock on the global market and import the refined fuel it needs for domestic consumption.
“Subsidy removal must happen but it requires tact,” says Oluseun Onigbinde, the founder of BudgIt. “You have to figure out how to handle food inflation, provide alternative means of transport and ramp up social investment under a well-structured social investment programme.” TUC, in a statement on Monday, issued a raft of demands to the government, including an increase in the monthly minimum wage. Dele Alake, a government representative at the meeting, said most of the demands are not “impracticable.”It is almost certain the Nigerian government is not going back on the fuel subsidy removal policy.
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