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Nigeria’s Fuel Subsidy: The Nation’s Shocking Revelation under the New President

Nigeria’s Fuel Subsidy Sparks Chaos as New President’s Unexpected Announcement Causes Nationwide Panic

In a surprising turn of events, chaos erupted across Nigeria as the country’s newly inaugurated president, Bola Tinubu, made an impromptu statement during his inaugural speech, sending shockwaves throughout the nation. As he momentarily diverted his attention from the teleprompter, President Tinubu declared, “The fuel subsidy is gone,” referring to a long-standing subsidy that has kept petroleum product prices artificially low.

With no specific timeline or additional details provided regarding this significant policy shift, memories of a similar attempt by a past president to remove the subsidy 11 years ago triggered concerns and unrest among the population. In mere hours following President Tinubu’s address, hundreds of people flooded the streets, scrambling to secure what they believed would be the last available fuel sold at government-regulated prices. However, only a fortunate few managed to procure fuel, as many filling stations either ceased operations or unilaterally increased prices by more than 200%, resulting in widespread chaos and an artificial scarcity.

Despite attempts by the president’s team to clarify that the subsidy’s removal would not take effect until the end of June, aligning with the outgoing administration’s budget, the damage was already done, and panic had taken hold. By Wednesday, even the state-owned oil company announced its intention to raise petrol prices.

The repercussions of this sudden development quickly surfaced as transport fares skyrocketed, leaving commuters stranded at bus stops, and the influential labor union prepared for a confrontation with the new government. Joe Ajaero, leader of the Nigeria Labour Congress (NLC), expressed outrage, stating in a press release, “By his insensitive decision, President Tinubu on his inauguration day brought tears and sorrow to millions of Nigerians instead of hope.”

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Despite Nigeria’s abundant oil resources, the country remains incapable of refining crude oil domestically to meet its demands. The four state-owned refineries lie dormant, compelling the nation to import refined petroleum products, which are then sold at government-fixed prices. Consequently, while citizens in countries like the UK and Ghana paid £1.44 ($1.80) and 14 cedis ($1.24) per liter of petrol, respectively, in May, Nigerians enjoyed a subsidized price of 185 naira ($0.40), despite all three nations sourcing their fuel from the same international market.

For decades, Nigeria has adhered to this practice, shielding its residents from the actual cost of petrol. However, the sudden elimination of the fuel subsidy has shattered this long-standing status quo, leaving the populace grappling with the economic and social implications of this dramatic policy shift.

This month Nigerians have been paying 185 naira ($0.40, £0.32) per litre for petrol.

Nigeria Faces Fuel Subsidy Dilemma as President Tinubu Acknowledges Financial Strain

Nigeria’s newly elected President, Bola Tinubu, has highlighted the country’s financial challenges as he emphasizes the need to address the dwindling revenue. In response to the financial strain, the government has allocated a staggering $7 billion to subsidize fuel during the first half of the year. This amount accounts for 15% of the budget, surpassing the combined allocations for education (8.2%) and health (5.3%).

While subsidies can be beneficial and are implemented in various sectors across many countries to ensure affordable costs for citizens, corruption remains a significant concern for Nigerians. Government agencies provide conflicting reports on the volume of imported fuel, and unscrupulous sellers have been known to divert fuel to neighboring countries to secure higher profits.

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Ironically, President Tinubu himself led the resistance against ending the fuel subsidy in 2012, describing the government’s policy as throwing the people “into the depths of the midnight sea.” Ultimately, the policy was reversed. However, there is now a growing acceptance that removing the subsidy is necessary to free up funds for critical public services such as transportation, healthcare, and education.

Analysts anticipate that fuel prices will rise significantly, ranging from 250 to 350 naira per liter, following the current upheaval. Although the increase may not appear substantial, its consequences will be far-reaching in a country where one in three individuals is unemployed, inflation has reached a record 22%, and 96 million people live below the poverty line of $1.90 per day.

Compounding the situation is Nigeria’s heavy reliance on fuel-powered generators due to inadequate electricity infrastructure. This dependence stretches from small barber shops to corporate skyscrapers. Nigerians already spend over 60% of their income on food and transport, and with the minimum wage stagnating at $64 per month, many fear further impoverishment.

Critics note that President Tinubu’s announcement lacked the customary consultations with labor unions to seek common ground. In late 2021, when the previous government contemplated ending the subsidy, it proposed a monthly cash advance of 5,000 naira to assist impoverished Nigerians in covering transportation expenses.

Inflation in Nigeria is standing at an all-time high of 22%

Nigerians Fear Profiteering as Fuel Prices Rise Amidst Subsidy Scrapping

Amidst the ongoing removal of fuel subsidies in Nigeria, many struggling citizens, who have often witnessed politicians mismanaging the country’s oil wealth, now fear they may become victims of a profiteering racket. They question why pump prices have already increased at both private and state-owned filling stations, potentially for older and cheaper stock. Additionally, they express concerns about the fate of the government’s allocated funds intended to subsidize fuel in June. Will the money vanish or be utilized for their benefit? These uncertainties contribute to a growing sentiment that politicians expect citizens to make sacrifices while themselves avoiding any personal compromises.

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One individual at an Abuja petrol station remarked, “Had the president also outlined government cost-cutting measures, such as selling a jet from the presidential fleet or reducing Aso Rock’s budget on refreshments, the message might have been better received.” This sentiment reflects the desire for President Tinubu to showcase tangible steps towards fiscal responsibility and austerity alongside the subsidy removal announcement.

Moreover, President Tinubu’s inaugural pronouncement was not the kind many anticipated, particularly considering his limited electoral mandate, having been elected by less than 10% of registered voters. It is unlikely that he will reverse the subsidy removal policy, as he leans more towards free-market-driven forces compared to his predecessor, Muhammadu Buhari, who exhibited a pro-welfare stance.

While many Nigerians hoped for President Tinubu to hit the ground running, there is a prevailing sentiment that he should have adhered to the initial script during his inaugural address, explicitly mentioning the “phasing out” of the petrol subsidy.