The president said the fuel subsidy is gone because there was no provision for it in the 2023 budget and ever since, there has been panic buying and uproar from Nigerians.
Recall that this is not the first time there has been an attempt to remove fuel subsidies.
In January 2012, former President, Goodluck Jonathan attempted to remove the fuel subsidy but was not successful.
The government argued that the removal of the heavy subsidy would free up funds for other public services, including health and infrastructure projects, and the liberalization of the fuel industry would benefit the economy.
While the current situation is affecting Nigerians, it is important to create an avenue for enlightenment and this explainer will highlight some benefits of fuel subsidy removal.
According to the National Orientation Agency, removing fuel subsidy in the country will stop corruption around what is known as the subsidy regime, which has made some individuals stupendously rich without industry. Now, this will bring about a resource balance and will be of benefit to majority of the populace.
It will free up the humongous amounts paid out as subsidy, paving way for enhanced growth in critical sectors of national development. This means that other sectors of the economy will be developed and not just those perceived as critical.
The subsidy removal will also put an end to the smuggling of Nigeria’s Premium Motor Spirit (PMS) to neighbouring countries, which is an organised theft and diversion of the PMS aided by the country’s easily penetrated borders which affect the economy.
This development will solve the problem of perennial fuel scarcity and the attendant hardship on citizens thereby stimulating responsible consumption and reducing waste as the prices become more market reflective.
It will also help in the growth of domestic refineries, which in turn will create jobs for Nigerians, and with competition in the industry and market forces, there will be a drive down in the price in the long run.
The fuel subsidy removal will curb the greed for higher profits and deliberate sabotage by a few players in the oil industry which will positively affect the economy of the country.
In the past, Nigeria pays N400bn monthly in fuel subsidy payments. What the removal means is that the government will put that money to use in other sectors like education, health, and other infrastructural development.
This will strengthen the performance and outputs of the sectors the subsidy fund would be diverted to.
However, questions have been raised like “Will the price continue to rise?” this will be determined by the market forces and consumers will be protected by industry regulators and the consumer protection council.
Moreso, the benefits of fuel subsidy removal outweigh the continual payment of it, Nigerians will experience many inconveniences but the results will yield more positive outcomes for the people in the long run.
Some Nigerians who believe the removal is necessary hope to see results in a few months and expect ease on the current situation.
