.png)
Meaning And The Origin Of Fuel Subsidy in Nigeria
Nigeria, as one of Africa's largest oil-producing nations, has long relied on subsidies to stabilize the prices of essential commodities, including liquefied petroleum gas (LPG) or cooking gas. However, the recent removal of subsidies on fuel (PMS fuel) by the present government of president Asiwaju Bola Tinubu, has also impacted price of LPG gas has sparked significant debates regarding its impact on the Nigerian population, particularly the low-income households heavily dependent on this affordable energy source. In this article, we will explore the history of LPG gas subsidies in Nigeria and analyze the potential consequences of their removal.
Subsidy was created by Obasanjo in 1971 or so to provide a succor to Nigerians as at the time of its creation to respond to global oil prices shock.
Many Governments attempted to remove it, including Baba Buhari who only included it in next year's budget, but President Tinubu took the bold step as a Leader. That's why I always used to say that one of the qualities of a good leader is taking the right decision even at the wrong time due to its benefits.
Brief History of LPG Gas Subsidies in Nigeria
Origin of subsidy in Nigeria; they were first introduced in Nigeria in the 1970s as a response to the oil price shock in 1973. However, in November 2021, the APC government announced it's plan to remove the subsidy and replace it with a monthly #5000 transport grant for poor Nigerians.
Recall president Tinubu had, in his inaugural speech on 29 may 2023, announced the removal of fuel subsidy.
For many years, the Nigerian government subsidized the cost of petrol (PMS) to ensure its affordability and accessibility to the general population. This initiative also aimed to encourage the use of LPG as a cleaner and more environmentally friendly alternative to traditional fuels such as firewood and kerosene. The subsidies helped mitigate the high costs associated with the production, distribution, and marketing of LPG, making it a preferred option for cooking and other domestic purposes.
Buhari In 2014: Subsidy Records
* Buhari subsidy records from 2015 :#654bn,
*2016:#240bn,
* 2017:#154bn,
* 2018: #1.1trn,
* 2019: #508bn,
* 2020: #864bn,
* 2021: #1.43trn,
* 2022: #4.4trn - projectly 3.6 trn in 2023..
HE spent more on subsidy than any dispensation in Nigeria's history...
Sai baba.
Impact of Subsidy Removal On LPG Gas
1. Price Increase:
The removal of fuel subsidy has resulted in a significant price increase of LPG gas, making it more challenging for low-income households to afford this essential energy source. Without government intervention to cushion the impact, the cost of LPG gas has surged, burdening consumers who rely on it for cooking and heating.
2. Implications for Health and Environment:
The removal of subsidies on petroleum products in Nigeria, also threatens to reverse the progress made in promoting cleaner and healthier energy alternatives. As the prices rise, households may resort to using traditional fuels like firewood, charcoal, or kerosene, which have adverse effects on indoor air quality and contribute to deforestation and carbon emissions. This shift could undermine Nigeria's efforts to reduce its carbon footprint and improve public health.
3. Economic Impact:
Subsidy removal has implications for the LPG industry as well. Domestic LPG producers and distributors may face challenges as consumers reduce their consumption due to higher prices. This could negatively impact investment in infrastructure development and hinder the growth of the sector. Additionally, job losses within the industry may occur, affecting the livelihoods of workers and their families.
4. Opportunities for Market Diversification:
While the removal of subsidies poses challenges, it also presents opportunities for market diversification and innovation. Higher prices might incentivize increased investment in LPG production and distribution infrastructure, promoting self-sufficiency and reducing reliance on imports. Furthermore, it could encourage the development of alternative energy sources and technologies, such as biogas and solar cooking solutions, which could provide sustainable options for households.
Conclusion
The removal of subsidies on petroleum products in Nigeria has triggered a series of repercussions, impacting consumers, the environment, and the LPG industry. The increased prices threaten the affordability and accessibility of LPG gas for low-income households, potentially leading to a resurgence in the use of traditional fuels with detrimental health and environmental consequences.
As a layman who does not understand much on economic indices to alternatives, the 400billion monthly Subsidy money should be Channel to either education or health.
Let me break it down; the Subsidy money should be like an intervention fund with a direct benefit to ordinary Nigerians. A kind of reminiscent of Jonathan's SURE-P and PTF of Abacha. This will be possible through creation of another separate Intervention program to be headed by a highly patriotic and committed Nigerians to supervise, manage, control and Coordinate it.
However, the removal of subsidies also presents opportunities for market diversification and innovation, promoting self-sufficiency and sustainable energy solutions. It is crucial for the Nigerian government to address the challenges arising from subsidy removal through targeted interventions and support, ensuring the continued availability of affordable and clean energy for all segments of the population.