NIGERIA’S newly elected President, Bola Ahmed Tinubu, made a significant policy change by removing the long-standing fuel subsidy in the country. President Tinubu argued that the subsidy primarily benefited the wealthy and failed to support the poor.
The announcement created panic-buying among consumers as private oil companies ceased selling gasoline, leading to long queues at state-owned gas stations across the nation. Fuel prices skyrocketed in major cities like Abuja and Lagos, rising from 185 Nigerian naira ($0.40) per litre to 600 naira ($1.30) within a day of President Tinubu taking office.
During his inaugural speech, President Tinubu emphasised the inequity of the fuel subsidy, stating, ‘The subsidy regime which has increasingly favoured the rich more than the poor is no longer justifiable due to depleting resources.’ He applauded the outgoing administration for initiating the phase-out of the subsidy.
The Nigerian National Petroleum Corporation (NNPC) assured the public that there was an adequate gasoline supply to meet the demand and urged against panic buying.
NNPC CEO Mele Kyari expressed support for the decision to end the subsidy during a press conference. He revealed that the subsidy expenses had been covered by the private sector, as the government was unable to fulfil its financial obligations to the corporation.
Despite being the second-largest oil producer in Africa, Nigeria relies heavily on fuel imports due to a lack of domestic refineries.
In 2000, the government introduced the fuel subsidy to lower fuel costs by providing direct financial assistance to oil companies, aiming to benefit the general public.
Nigeria has been spending trillions of naira annually on petroleum product subsidies. The removal of the fuel subsidy marks a significant policy shift by President Tinubu’s administration, reflecting his commitment to addressing the disparities in subsidy benefits and allocating resources more effectively.