The aftermath of fuel subsidy removal in Nigeria resulted in the skyrocketing of fuel price across the country. As soon as President Tinubu made the announcement during his inauguration, marketers started hoarding the fuel in their possession in hopes of selling to the highest bidder. Although some state governments sent out task forces to force filling stations to sell at the normal prices, majority of stations in the country are already selling at three times the normal price.
There are speculations that the fuel subsidy is a fraudulent concept. Many are claiming that the funds are shared between a select few who live large on it. It is even quite confusing when one discovers that the government imports 100 percent of all fuels into the country. Who, then, do you pay the subsidy to when your agencies are the importers of the fuel? The Nigerian National Petroleum Company Limited (NNPCL) has also come out to say that the Federal Government owes it in billions.
Is the solution fuel price reduction or minimum wage review?
Now that the situation has developed and the masses are adapting to it, the Trade Union Congress (TUC) has asked the Federal Government to reserve the old price of fuel until the government reaches an agreement with the trade unions. TUC President, Comrade Festus Osifo, told newsmen that their demand is the decision of the congress’s national executive council, which was made after a long deliberation on fuel subsidy removal issues. The problem is not the unwillingness of the new president to retain the old price but the fact that the new budget does not make any provision for fuel subsidy payment.
According to Tinubu, the budget that Buhari signed before leaving office does not account for fuel subsidy. So, the concern has been whether reduction in price is the solution, if that is ever possible, or reviewing salaries of workers in tune with the increase in goods and services. Since the government has made it clear that subsidy payments cannot be reinstated, then the masses will have to cope with the current situation of increased costs.
Massive inflation underway in every sector of the country.
If fuel cannot be subsidized for all, the other option is to review workers’ salary to compensate for the rise. In 2022, Minister of Labour and Employment, Senator Chris Ngige, said that the Federal Government was on the verge of approving salary increase for all categories of public service workers in Nigeria. However, he did not state the specific percentage or amount being proposed as of the time. The reason given at that time was that it was meant to cushion the effects of inflation, increase in cost of living, increase in transportation, increase in housing cost, hike in electricity tariff and other utilities.
This was when fuel price still hovered at around N200 per liter. Presently, it has tripled in some areas to between N600 and N800. The increase will effect every sector of the economy, resulting in all-round inflation. Inflation occurs when there is increase in price of goods and services as a result of increase in the cost of production. The government will also make it permanent if salary is increased as this would spur every other entity in the country to hike prices.
Nigeria would have still experienced this under other presidential candidates.
During the campaign for the just-concluded 2023 general elections, other presidential candidates stated categorically that they would also remove fuel subsidy payments from the budget. In particular, the presidential candidates of the other two leading political parties, Peter Obi and Atiku Abubakar, clearly announced that if they were elected, they would make it a thing of the past. However, some people believe that their own candidates would have fared better because provisions would have been made to cushion the effect of the removal.