The real cost of fuel subsidy and tax implications by taiwo oyedele the recent announcement by the federal government of nigeria to remove fuel subsidy with effect from january 2012 has been generating a lot of interesting debates and mixed reactions from different quarters. The federal government of nigeria has made a savings in excess of n1. Chasing water falls subsidies in recent years have experienced largescale civil unrest15. Nigeria s attempted fuel subsidy removal in 2012 illustrates how the mismanagement of such adverse effects can jeopardise entire reforms. Compensation mechanisms for fuel subsidy removal in. Nov 28, 2011 the positives of oil subsidy removal in nigeria since the days of one of nigerias foremost president, chief olusegun obasanjo, everything in me has always been against removal of oil subsidy. Asked if the proposal for total subsidy removal had been discussed with labour, the source said that members of organized labour in the country were. Impacts on poverty of removing fuel import subsidies in nigeria. Removing the fuel subsidy, therefore, remains one of the most intricate socioeconomic policy issues in nigeria. Understanding oil subsidy in nigeria oladoyin zaccheus the college at brockport follow this and additional works at.
Oclcs webjunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus. The nigerian government removed part of this subsidy claiming that prices paid by nigerians to use petroleum products are less than what they should pay. Nigeria is in dire need of economic policies that will improve its sustenance and growth as a strong african economy. The aftermath of the conflict on fuel subsidy removal in nigeria. The aim of this project work is to enlighten the people on the various possible effect of the removal of fuel subsidy on the economy, how it affects the various sectors especially the real sector. The question the proponents of fuel subsidy removal are still able to answer is how significant will the fuel subsidy removal be on the socioeconomic activities in the country given the fact that it is the main source of energy for all facet of the economy. When late president umaru musa yaradua came in, the nigeria labour congress, nlc, resisted the increase and force yaradua to revert to the n65 per litre for. Nigeria restores fuel subsidy to quell nationwide protests. Discussion on subsidy removal from nigerian economy. Monday 2 nd, january 2012 nigerians took to the streets to protest a fuel subsidy removal by the then federal government led by president goodluck jonathan.
The president goodluck jonathan administration has always made unpopular decisions which negatively impacted on the lives of the citizenry. To ascertain the extent of the relationship between subsidy removal on standard of living. In january 2012, the nigerian government therefore announced its policy to remove the subsidies attached to oil products. Preindependent nigeria had agriculture as the major foreign exchange and revenue earner. This subsidy removal will also engage so many youths in other sectors of the economy. Subsidy reform also provides substantial benefits in relation to climate change mitigation. Nigerias fuel subsidy continues to crowd out other development spending. According to the statement made by the finance minister and coordinator of subsidy removal, dr. Previous governments have attempted to remove the subsidy without success. The application for nigeria emphasises the relevance of this approach. Raising ambition through fossil fuel subsidy reform. A simulation of the removal of fuel subsidy and the performance of.
The impact of kerosene price subsidy removal on households. Say no to fuel subsidy removal in nigeria home facebook. However, this came to an end on january 1st, 2012, after an announcement from president goodluck jonathan, that subsequently, the subsidy was to be removed. Protests took place across the country, including in the cities of kano, ojota part of metropolitan lagos, abuja, minna, and at the nigerian high commission in london. And now, its connected to the adobe document cloud. Other alternative revenue earners such as agricultural and mineral resources were explored and their proceeds used to support and foot the bill of government expenditures. In a bid to addressing the attendant problems associated with the removal of subsidy this paper tried to look into the role increase in pump price will have on transportation, price of commodities and the current value of naira. Emmanuel ibe kachikwu while making a presentation at the recent annual conference of the national association of energy.
Impacts on poverty of removing fuel import subsidies in. Adobe acrobat reader dc software is the free global standard for reliably viewing, printing, and commenting on pdf documents. Reliable information about the coronavirus covid19 is available from the world health organization current situation, international travel. Consequences of the january 2012 oil subsidy removal in. The decision by the government to out rightly remove the subsidy on fuel ignited series of arguments and. Nigeria s fuel subsidy continues to crowd out other development spending. Compensation mechanisms for fuel subsidy removal in nigeria executive summary the reform of the fuel subsidy regime is fundamental to the overhaul of the nigerian economy and achievement of inclusiveand sustainableeconomic diversification and growth. In fact, the subsidy removal apostles are economical with the truth. Nigeria is a country endowed with vast mineral resources prominent among which are the oil and gas reserves. Crude oil, since its discovery in commercial quantity in 1956, has been the main economic stay of my country, nigeria. Labour leaders, opposition parties, prominent citizens describe the plan as misadvised and urged government to change its mind. Immediately the first oil field was discovered in 1956 at. In this paper, we use an economywide framework to identify the impact of removing the fuel subsidy on the nigerian economy.
Retrieved from compensationmechanismsfuelsubsidyremovalnigeria. For some years now, one of the most taunting and complex socioeconomic policy issues in nigeria remains the issue of fuel subsidy removal. However, this issue has become highly contentious in recent time due to the incessant nature and the effects on the economy. The plaintiff is a regular purchaser of fuel from the various fuel stations across nigeria. The country possesses 28% of africas proven oil reserves, second only to libya. Essays on energy e ciency and fuel subsidy reforms a thesis submitted to the university of manchester for the degree of. Section 2 discussed key features of the petroleum subsidy in nigeria.
However, the limited financial capacity of developing countries means that international support is required. Nigeria is a nation endowed with abundant human and material resources. The governments fiscal policy stance following subsidy removal is important in determining the. To determine the effect of subsidy removal on food items. Protests took place across the country, including in the cities of kano, ojota part of metropolitan lagos, abuja. Its the only pdf viewer that can open and interact with all types of pdf content, including.
Other mineral deposits like coal, tin and agricultural resources. Pdf on may 4, 2016, moaz hedaia and others published impact of the energy subsidy removal in 2014 on the all income groups and poverty in egypt find, read and cite all the research you need on. Jan 03, 2012 a man is killed as thousands of nigerians protest around the country at the removal of a fuel subsidy, which has led petrol prices to more than double. Lessons from iran, nigeria, and india subsidies cost the world trillions of dollars each year. In the early 1950s and at independence, agriculture was the chief foreign exchange earner of this nation. Nigerias attempted fuel subsidy removal in 2012 illustrates how the mismanagement of such adverse effects can jeopardise entire reforms. Impact of petroleum subsidy removal on government expenditure. Nwaoga and others published fuel subsidy removal in nigeria. Given the recent social unrest in nigeria as a result of this policy change, we also examine the extent government can allay the detrimental effects of the removal of the subsidy on the poor, by combining the removal of the fuel subsidies with other policies aimed at assisting the poor and or domestic producers of petroleum products. D eme, okechukwu innocent emeh, ikechukwu eke jeffrey department of public administration and local government, university of nigeria, nsukka abstract a flip over from the economy is the issue of fuel subsidy removal, which many nigerians felt very touchy about. The strike action lasted for about nine days and disrupted normal. Nigeria is a country blessed with abundant human and material resources. The minister of works arch michael onolememen during his plea to nigerians on the need to embrace government policy on subsidy removal said that the subsidy removal will create 3000 jobs in his ministry. The study investigated the effects of petroleum subsidy removal on government expenditure in.
Nigeria, fuel subsidy, poverty, income distribution, economywide. Nigeria, like other oil exporting countries in the world has embarked on the policy of gradual removal of fuel subsidies since 1970s. Mbendi 2012 reveals that nigeria is the 10th largest oil producer in the world, the 3rd largest in africa and the lost prolific. Jan 10, 2012 nigerias fuel subsidy continues to crowd out other development spending. The good luck jonathan administration has said it is fuel subsidy removal or nothing if this policy sales through, the administration claims it is going to save the nation n1. I know as of fact that the plaintiff and his family own cars and regularly travel by air within nigeria. Mobilising support to prevent a further rape of the nigerian masses by opposing the fg planned fuel subsidy removal. Nigerians have been groaning under the yoke of a government many of. Nigeria fuel subsidy removals dire consequencesnaijagists. Governments provide subsidies for multiple reasons, yet many economists consider subsidies largely regressive, poorly targeted toward intended beneficiaries, and economically distortive and inefficient.
It specifically aimed to identify factors influencing choice of cooking fuel in nigeria, and evaluate changes in households. Aug 01, 2014 advocates for oil subsidy removal argue that these subsidies only divert much needed investment in development projects especially in the developing economies, to rich players in the oil sector. Department of economics and developmental studies federal university, dutsinma, kastina state corresponding author. In addition, since the removal of the petroleum subsidy is perhaps sure way for.
Energy e ciency appears a key option to mitigate co. The removal of the subsidy on fuel by the federal government of nigeria at the dawn. Lessons and implications prepared by a staff team led by benedict clements and comprising david coady, stefania fabrizio, allan dizioli, katja funke, javier kapsoli, kangni kpodar, alvar kangur, masahiro nozaki, baoping shang, mauricio soto, vimal thakoor, louis sears, and lilla nemeth all fad. Nigerians have in the past five days reacted angrily to governments actions on the fuel subsidy.
The positives of oil subsidy removal in nigeria sahara. Impacts of removing refined oil import subsidies in nigeria. The main objective of study focuses on effect of subsidy removal on nigerian economy, the study has the following specific objectives. Deregulation and antisubsidy removal strikes in nigeria. For example, when the government of indonesia dramatically raised fuel prices twice in 2005thereby escalating the prices of food and commoditiesdemonstrat ors took to the streets throughout the country, with mobs. Removal of fuel subsidy is a difficult topic, especially with the masses, most people dont understand, and need to be educated on such serious economic issues about its pros and cons.
Furthermore, the transparency and competition which will follow the deregulation of petroleum industry, will in turn, attracts inv estors, leading to the establishment of private refineries across the country and this will go along way to help nigeria meet up with its local demand and have surplus for export. Understanding oil subsidy in nigeria by oladoyin zaccheus. Algeria 1998 food riots, bolivia food riots 1985, jamaica fuel subsidy riots1985, jordan food riots 1996. May 23, 2012 nigeria fuel subsidy removal dire consequences the federal governments unpopular plan to fully remove fuel subsidy is a ticking time bomb that will do nobody any good. Impact of petroleum subsidy removal on government expenditure in nigeria 1okereke, 2samuel f. Compensation mechanisms for fuel subsidy removal in nigeria. A man is killed as thousands of nigerians protest around the country at the removal of a fuel subsidy, which has led petrol prices to more than double. Lafiaji barely six weeks after nigeria received rare favourable commentaries in the international media for.
The thrust of the study is to examine the causes of the fuel subsidy removal, to identify the benefits of fuel subsidy removal, to describe the effects of the subsidy removal, and the socioreligious implications of the removal of fuel subsidy to the citizens of nigeria. The fuel subsidy in nigeria if removed will translate to a sudden and massive tax on an essential commodity fuel, which will have the knock off effect of raising food prices. Pdf impact of the energy subsidy removal in 2014 on the. Subsidy removal crisis in nigeria by onyishi, anthony obayi ph. Naccima nigeria national association of chambers of commerce, industry, mines and agriculture 18 november 2011 the ongoing debate on the removal of fuel subsidy by the federal has called for immediate action by business member.
The nigerian petroleum subsidy translates to sustained economic growth. Removing fossil fuel subsidies and applying appropriate taxation. Direct benefit transfer of lpg cooking gas subsidy in india as shown by international experience, efforts to reform energy subsidies have a mixed record of success. Dr goodluck jonathan oct 6, 2011 outburst over plan to remove petroleum products subsidy in nigeria outrage yesterday greeted governments plan to remove subsidy on petroleum products from january. Presented in partial fulfillment of the requirements for graduation in the college honors program. This good news was delivered by the honourable minister of state for petroleum resources, dr. The stake holders, unions and people made snide comments about the removal of fuel subsidy, they say that the policy is unconstitutional because the policy does not favour the poor masses, and they did not seek the consent of the people and their full support before implementing. Impacts of removing refined oil import subsidies in nigeria on. The impact of gasoline subsidy removal on the transportation. Nigeria within the jurisdiction of this honourable court. Though the fuel subsidy helps the po or by keeping nigerian fuel pri ces lower than world prices, it. In his reaction to the increase, comrade aliyu wabba said.
Pdf fuel subsidy removal as an imperative for enhancing. This, one of the rationale for removal of the petroleum subsidy is to correct these socials ills that continued to deep down the petroleum sectors. This paper provides a detailed picture of the indias reform of household. May 23, 2012 may 23, 2012 nigeria fuel subsidy removal dire consequences the federal governments unpopular plan to fully remove fuel subsidy is a ticking time bomb that will do nobody any good. The removal of oil subsidy will drastically reduce corruption in the. The nigeria labour congress nlc has rejected the removal of the petroleum subsidy by the federal government. Pdf discussion on subsidy removal from nigerian economy. It is not true that the way jonathan is going about the subsidy removal is the best way be deregulate the downstream oil sector.
The youth employment intervention will target large numbers of. Occupy nigeria was a sociopolitical protest movement that began in nigeria on monday, 2 january 2012 in response to the fuel subsidy removal by the federal government of president goodluck jonathan on sunday, 1 january 2012. Nigerians protest at removal of fuel subsidy bbc news. Deregulation and anti subsidy removal strikes in nigeria, 2000 2012.
Numerous and frequentlyupdated resource results are available from this search. Finally, from the highlighted results, we draw the following concluding remarks inchapter 5. Effect on growth article pdf available in the journal of middle east and north africa sciences 38. Impacts of removing fuel import subsidies in nigeria on. The positives of oil subsidy removal in nigeria since the days of one of nigerias foremost president, chief olusegun obasanjo, everything. Outburst over plan to remove petroleum products subsidy in. Advocates for oil subsidy removal argue that these subsidies only divert much needed investment in development projects especially in the developing economies, to rich players in the oil sector.
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