Subsidies were first introduced in Nigeria in the 1970s as a response to the Oil Price shock of 1973 as the situation of the shock led to a global rise in oil
The year 2015 was the first year the Buhari-led administration raised the issue of fuel subsidy removal after there was no budgetary provision for subsidy in 2016.
With an estimated 37.2 billion barrels of proven oil reserves, Nigeria is one of the world’s largest oil producers. However, the country’s mineral riches have not resulted in a significant improvement in the quality of life for the majority of Nigeria’s citizens, 54 per cent of whom live below the national poverty line.
Nigeria’s fuel subsidy continues to crowd out other development spending and by comparison,, Nigeria’s total allocation for education is about $2.2 billion and it is not much higher for health care. Infant mortality in Nigeria remains unacceptably high at 90.4 per 1,000 live births. In 2004, it was estimated that only 15 per cent of the country’s roads were paved. The $8 billion from the fuel subsidy could help to address some of these issues.
LEADERSHIP Weekend reports that the Nigerian National Petroleum Company Limited, NNPCL, spent about N5.3 trillion of its profit to subsidise petrol between 2017 and 2022.With cross border smuggling it has been difficult to ascertain the actual domestic consumption figures of petrol. In 2019, Nigeria shut its land borders as part of government’s sustained efforts to check smuggling and other illicit cross-border activities.Though Petrol prices have nearly tripled after President Bola Tinubu said his administration would no longer subsidize gasoline for citizens of Africa’s largest oil producer.
Meanwhile, the Group Chief Executive Officer, GCEO of NNPCL, Mallam Mele Kyari, noted that the removal of the subsidy which has been a burden on NNPCL cash flow will free up funds to enable optimal operations in the company. Similarly, Major Oil Marketers Association of Nigeria and Depot and Petroleum Marketers Association of Nigeria applaud and endorse the pronouncement by President Bola Ahmed Tinubu, on the phase-out of the petrol subsidy regime.
“They are ensuring distribution channels remain uninterrupted, thereby making fuel readily available at all filling stations across the country.
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