Fuel Subsidy is Gone?

The removal of the subsidy on New Year’s Day had a domino effect at a level perhaps not expected by the government. Transportation costs increased by more than 200 per cent and many Nigerians that had travelled for the holidays and spent money in celebration were left stranded. Some were forced to sell their belongings at prices less than their original values to raise money for transportation.

The price of other commodities went up, too, as traders complained that the high cost of transporting their goods had to be factored into the selling price. By the sixth day following the fuel subsidy removal, Nigerians were calling on the Nigerian Labour Congress (NLC) to declare a strike due to the hardship caused by the removal of the subsidy. In a last-minute attempt at intervention, President Jonathan gave a speech on 7 January, 2012 explaining to Nigerians that the country could not afford to continue to subsidize petrol due to its financial strains on the economy. He promised that the money saved from the subsidy would be channelled into a government programme to help the youths. The then-governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, backed the removal of fuel subsidy saying that the country spent $8 billion on it the year before and that ‘subsidies should be subsidies for production and not for consumption’.

Despite this, a nationwide strike began two days after, followed by a series of protests, particularly in Lagos and Abuja. Under ‘Occupy Nigeria’, protesters gathered for days at Freedom Park in the Ojota area of Lagos. On 16 January, the president announced a reduction in the price of fuel from N141 to N97 per litre. In return, the NLC announced the suspension of the protests and strike action. At the end of it, the police had reportedly killed 15 protesters and more were injured. Jonathan’s presidential election loss in 2015 was partly ascribed to his administration’s mishandling of the fuel subsidy issue which culminated in a nationwide strike.

More than two decades after the Occupy Nigeria protest caused by fuel subsidy removal, debate and conversation around it still continues. In October 2022, when former president, Muhammadu Buhari, presented the 2023 budget to the National Assembly, Buhari announced that the subsidization of petrol would end by June 2023, arguing that the scheme was unsustainable.  The then-minister of finance, Zainab Ahmed, explained that the federal government had projected to spend N6.7 trillion on petrol subsidy payments for the year 2023 but that the amount had been reduced to N3.35 trillion to fund the subsidy till June 2023. In April 2023, however, Ahmed announced that the administration had suspended the removal of the subsidy. However, since the subsidy was not in the latter part of the 2023 budget, the responsibility fell on President Bola Tinubu to either go with the original plan of his predecessor or to provide a supplementary budget that would cover fuel subsidy. He chose the former.

On 29 May 2023 when he was sworn in as president, Tinubu in his inaugural speech declared that ‘fuel subsidy is gone’, a statement that almost immediately changed the entire fuel market. Fuel stations tripled or quadrupled the price of their petrol with some selling for as high as N1,000. Long queues returned as some stations, uncertain about the volatility, refused to sell. To bring some sort of sanity, the Nigerian National Petroleum Company (NNPC) Limited introduced new price lists across the nation at an average of N500 which put the sudden increase to about 200 per cent over the previous price of N185.