Fuel subsidy and how removal fit affect Nigerians

Pesin dey pour petrol into im car from jerrycan

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Pesin dey pour petrol into im car from jerrycan

Long queues for di Premium Motor Spirit (PMS) wey pipo sabi as petrol don return to most filling stations across Nigeria.

Dis dey come less dan 24 hours into di administration of di new Nigeria President Bola Ahmed Tinubu.

Tinubu for im inaugural speech on Monday, 29 May bin declare say “Fuel Subsidy is gone.”

E say “Subsidy no longer fit justify im ever-increasing costs in di wake of drying resources.”

E say im goment no go fit dey provide di money to subsidize di product plus im dey take di decision because di 2023 budget no provide for di payment for di payment of fuel subsidy from di second half of di year.

Although na di immediate-past administration of Muhammadu Buhari finally remove all di fuel subsidy afta several attempts by previous administrations.

But dem say dem no go begin implement am until June 2023.

President Tinubu for im speech commend di decision of di last administration to discontinue di petrol subsidy regime wey don increasingly favour di rich pass di poor.

E say under im administration, “dem go re-channel di money from Fuel Subsidy into beta investment in public infrastructure, education, health care and jobs wey go materially improve di lives of millions.”

How President Tinubu inaugural speech ginger fuel scarcity

President Bola Tinubu during im inauguration as President on 29 May

President Bola Tinubu during im inauguration as President on 29 May

Less dan two hours afta President Tinubu inaugural statement, queues don begin form for most filling stations across Nigeria.

For Lagos, from Total to Mobil and Conoil fuel stations around Ojota and on Lagos-Ibadan Expressway, motors plenty for queues wey dey struggle to buy petrol.

Queue plenty for NNPC wey dey Ikoyi. Some petrol stations for Apapa, Ijora and oda parts of Lagos don close.

Di same thing dey happun for Abuja, Kano, Ondo, Osun and oda parts of di kontri.

Passengers dey stranded for road, Di few commercial cars and buses wey dey work don hike dia prices.

Di Group Chief Executive Officer of NNPC, Mele Kyari say sufficient supply of di product dey plus dem don dey monitor all dia distribution network to ensure compliance.

Dis na as e welcome di decision of di Nigeria goment to remove subsidies on petrol.

E tok say “di removal of di subsidy, wey don be burden on NNPC Limited cash flow, go free up funds to enable operations within di company.”

Fuel subsidy meaning

Long queues for petrol station

Long queues for petrol station

Many pipo dey ask wetin be fuel subsidy and how di removal go take affect Nigerians.

Fuel subsidy na form of goment intervention to reduce di cost of fuel.

Goment go provide direct financial support to oil companies, so dat dem go fit reduce di price of di product to consumers (Nigerians) to make am dey affordable for dem.

Nigeria na one of Africa largest producers of crude oil, and e dey rely heavily on dis resource for dia economic growth.

Sake of say Nigeria no get refinery, dem gatz export dia crude oil go anoda kontri come import di refined crude oil. Di money wey dem go take refine dis crude oil dey expensive and make e for no be burden on consumers, goment dey pay some part of di money to marketers.

Therefore goment dey control di price and na di amount dem tell marketers to sell, dem go sell am.

Dis na how common pipo dey benefit from goment, according to dem.

Di official reason for oil subsidies na to reduce di impact of rising global oil prices on Nigerians.

Fuel subsidy don dey di kontri since di 1970s.

Dem institutionalise am for 1977, under di regime of General Olusegun Obasanjo wit di promulgation of di Price Control Act wey make am illegal for some products (including petrol) to dey sold above di regulated price.

Between 2006-2018, Nigeria don spend about 10 trillion Naira on petroleum subsidies.

Why goment wan remove subsidy

Petrol attendant dey sell fuel

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Petrol attendant dey sell fuel

Di Nigerian National Petroleum Company for inside one report dem release for October 2022 say di agency record zero revenue from oil export sake of di subsidy payment.

Di company say dem use N199bn pay for petrol subsidy alone for October 2022 alone.

Between January 2022 and November 2022, goment say dem spend a total N3.302 trillion on petrol subsidy.

Di money wey Nigeria dey take pay for pay fuel subsidies too much and dem no go fit sustain am.

Goment say dem dey to consider removing di fuel subsidy so dat dem go fit fund oda sectors of di economy.

According to di federal goment, dem dey spend ₦40.1 billion daily, to subsidize every litre of petrol consumed in Nigeria by at least ₦600. Dis one mean say goment dey spend about ₦1.24 trillion on fuel subsidies monthly.

Di kontri dey owe and go need more money to subsidize fuel.

As of March 31, 2022, Nigeria total public debt tanda for ₦41.60 trillion ($100.07 billion).

Di Minister of Finance, Budget and National Planning, Madam Zainab Ahmed for January 2023 say wen she dey break down di 2023 budget, di kontri revenue performance as at November 2022 stand at 6. 5 trillion naira, wey represent 87 percent of di set target of 7. 8 trillion naira for di year.

And according to President Tinubu, wen dem remove di subsidy, im goment go fit re-channel di money from Fuel Subsidy into beta investment in public infrastructure, education, health care and jobs wey go materially improve di lives of millions.

Wen goment go remove di subsidy

Pesin dey buy fuel for petrol station

Pesin dey buy fuel for petrol station

President Bola Tinubu bin announce di removal of di fuel subsidy from 1 July, 2023, as e emphasize say im goment no go provide di money to subsidise di product.

Oga Tinubu say im take di decision because di 2023 budget no provide for di payment of fuel subsidy from di second half of di year.

Di Buhari administration bin tok say dem go stop di payment of fuel subsidy by di end of June 2023.

Di Minister of Finance, Budget and National Planning, Madam Zainab Ahmed, tok am during di public presentation of di 2023 Federal Government budget.

She tok say for di 2023 fiscal period, di goment don make provisions of N3. 36trillion naira for fuel subsidy payment to cover di first six months of dis year.

Di goment say dem go instead dey give poor Nigerians di subsidy money in form of N5,000 each as transportation.

Goment don try to remove am before?

Long queues for petrol station

Long queues for petrol station

Since Nigeria transition to civilian rule for 1979, many administrations and regimes don try to comot subsidy.

President Shehu Shagari bin raise di price of petrol in 1982, from 15.3 kobo a litre to 20 kobo.

For 1986 President Ibrahim Babangida announce partial removal of oil subsidies, which see petrol price increase from 20 kobo to 39 kobo per litre. Dis one follow di implementation of di Structural Adjustment Program wey di International Monetary Fund set.

Den for 2012 President Goodluck Jonathan chook hand to remove fuel subsidy pata-pata.

Di mata cause so much gbege and protest sotay di president no do and add 30% back to di fuel price.

For June 2020, President Muhammadu Buhari administration tok say dem sef go remove fuel subsidy as dem follow give approval to di Petroleum Products Pricing Regulatory Agency to remove di price cap wey dey for petrol.

But by March 2021, di government say dem go keep di price di same even as price of crude dey jump up – which mean say fuel subsidy still dey occur for Nigeria.

How di removal of subsidy go affect Nigerians

Cars queue for NNPC

Cars queue for NNPC

Di Programme Director of di Centre for Journalism Innovation and Development, Akintunde Babatunde explain say wit di Petroleum Industrial Act (2021) wey di former President Muhammadu Buhari sign into law, clear mandate say make di downstream sector dey decentralised.

Di petroleum Industrial Act (2021) provide for total deregulation of di petroleum downstream sector to drive investment and growth.

Dis one mean say di market go determine how much dem wan dey sell petrol.

“Goment no go dey control di price of fuel again, na di individual marketer go dey determine how much dem wan sell dia product. Some markerters fit dey sell for N400 or N405, di price go depend on how much dem buy am for di global market.” Akintunde tok.

E add say speculations dey say di price of petrol fit go as high as N500, N700 or more but if e no reach or make e pass as e go depend on di global prices.

Akintunde say wit di removal of subsidy, di effect na say di prices of goods and services go increase. Price of transportation go rise.

However, if di goment fit use di money dem dey use as subsidy for infrastructural development, take am build roads, schools and oda social amenities, e go make sense for Nigerians, e add.

Managing Managing Consultant of Flame Academy and Consulting Limited Orji Udemezue say removal of fuel subsidy na good thing but di prices of food and oda essential commodities go up.

“No doubt say removal of fuel subsidy go free up unnecessary expenditure goment dey use subsidize fuel. Wen you remove subsidy, market go move wit market price. Na good thing for dis economy to relieve himself of di burden. But then consequences dey, prices of food items go high, garri, rice, tomato, everything for market go go up.

Inflation dey rise. Removing subsidy go help economy run beta but go further damage di poverty level. Total removal fit no work at this time.”

President Bola Tinubu, NMPDRA respond to fuel scarcity

President Bola Ahmed media team don clear di fuel scarcity wey resurface for Nigeria afta di president inaugural speech.

Di media team for one statement say di panic buying wey happun following di president speech no dey necessary as di subsidy no go happun immediately.

Dem note say “di “subsidy is gone” wey President Bola Tinubu declare no be new development and no be action of im new administration.”

Di Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) don also chook mouth for di fuel scarcity wey follow di president speech.

Di authority tok say plenty supply of petrol dey to meet di demand as dem don take necessary steps to ensure say nothing interrupt di distribution channel and fuel dey readily available for all filling stations across di kontri.

“We dey work closely wit NNPC Limited plus oda key stakeholders to guarantee smooth transition, avoid any disruptions in supply plus ensure say consumers no dey short-changed in any form.”

NMDPRA call on Nigerians to dey calm and resist di urge to buy petrol keep. E also assure sau di removal of fuel subsidy na step towards building a more sustainable and prosperous future for di kontri.