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Fuel Subsidy Removal And National Development In Nigeria 

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– Fuel Subsidy Removal And National Development In Nigeria  –

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Abstract

Fuel subsidy is critical to the Nigerian economy. It is argued that fuel subsidy for years has remained the only avenue through which the Nigerian government lived up to its socioeconomic responsibility to its citizenry; the attempt to withdraw this policy has been interpreted as a move by the government to default on its responsibility.

This study, therefore, investigates the effects of fuel subsidy removal on national development in Nigeria between 1999 and 2012.

The specific questions for investigation were: Does the incremental increases in the pump price of fuel undermine the living standard of Nigerians?

Has the fuel subsidy probe improved on national revenue accounting? Did the mass protests that accompanied fuel price increase undermine the economic stability of Nigeria?

Public choice theory was adopted as the theoretical framework of analysis. The Ex-post facto design was employed as the research design. Data from secondary sources such as books, journals and official documents were qualitatively analyzed.

Introduction

1.1 Background of the Study

Subsidy has been defined as aids directly granted by government to an individual or private commercial enterprise deemed beneficial to the public. It is also a grant or gift of money from a government to a private company, organization, or charity to help it function.

In relation to fuel in Nigeria, it means the financial aid granted to autonomous and foremost oil marketers by the government for them to supply their products at a cheaper rate for the good of the masses.

This move is almost always aimed at boosting the economy of a country, providing social amenities for the people, stabilizing the market, creating employment opportunities and of course the assumption by the government that it is capable of fighting corruption.

The Nigeria Extractive Industries Transparency Initiative (NEITI, 2011) notes that the issue of subsidy is not alien to the nation’s blood stream because it existed during the military regime when the four refineries of the nation could only produce little which could not even satisfy the domestic needs of the people.

Subsidy, in economic sense, exists when consumers of a given commodity are assisted by the government to pay less than the prevailing market price.

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