1. LIMITATIONS IN NIGERIA’S OIL REFINERIES
Nigeria’s oil refineries have been facing limitations due to the soon-to-end dormancy handcuffing their functionality. This has led to heavy dependence on the importation of petroleum products. This reliance comes at a cost, commonly known as “fuel subsidy,” which the government has been covering.
2. PAYMENT OF FUEL SUBSIDY
Up until May 2023, the government of Nigeria was solely responsible for paying for the basic cost of refining and importation of petroleum products, which consequently resulted in the seeming affordability of these petroleum products to consumers.
3. REMOVAL OF FUEL SUBSIDY
In June 2023, things changed. Due to fluctuating international oil prices, the Nigerian government decided to stop covering the refining and importation costs. The ever-changing subsidy budget was putting a strain on the country’s finances, so the fuel subsidy was removed.
4. CONSEQUENCES OF FUEL SUBSIDY REMOVAL
The rise in petroleum prices has affected Nigerians disastrously, leading to a chain reaction. Higher transportation costs have led to increased food prices, which in turn raised the overall cost of goods and services as people struggle to cope financially.
5. IT IS A GLOBAL ISSUE
The increase in the cost of petroleum products is an issue that affects all countries across the globe. But in Nigeria, factors like a struggling economy and unreliable electricity supply make it feel even more challenging for its people.
6. POSSIBLE MEASURES THAT CAN MITIGATE THE EFFECT OF THE SUBSIDY REMOVAL
- INCREASE IN MINIMUM WAGE
A proportional increase in the minimum wage of salary earners will help them increase their purchasing power regardless of inflation.
- MUCH MORE MASS TRANSIT TRANSPORTATION SYSTEM.
The provision of budgetary increase for revamping/purchasing the states’ Mass Transit Transportation system, which is usually more affordable, with a much higher seating capacity, than the private transport system, can help subdue the effects of fuel subsidy removal.
- EFFECTIVE PALLIATIVE DISTRIBUTION
The provision of well-monitored and effective distribution of palliatives to the most impoverished, segmented and vulnerable citizens, such as cash palliatives, food palliatives, and clinical/pharmaceutical palliatives, is encouraged. This would help low-income households survive with the high cost of living.
- DIVERSIFICATION IN OUR SOURCE OF ENERGY
Energy research and investments should be persistently engaged in that explore other forms of energy sources to reduce, if not entirely halt, Nigeria’s heavy dependence on fossil fuels. If our cars can transport us using some sort of distilled water or a kind of high-pact rechargeable battery, or electricity, little or no regard would be given to the upwardly moving cost of petroleum products and the effects of fuel subsidy will be reduced.
- STABILITY IN OUR ELECTRICITY SUPPLY
The erratic power supply in Nigeria has not only pushed many businesses out of existence but has also discouraged viable foreign investments. Having a stable electricity supply reduces citizens’ dependence on petroleum products, which is not only friendly to the pockets but to the eco-system, will help reduce the effects of fuel subsidy on Nigerians.