Amidst the deteriorating economy and trying times in Nigeria, another case of drama has emerged as the price of petroleum skyrocketed on Wednesday, to nearly triple from the previous price. This comes just two days after newly elected President Bola Tinubu pledged to remove fuel subsidies as his first official act in office. There was some uncertainty after his statement about when exactly the measure would be implemented. But it appears that the subsidies have already been removed, as prices at government-run gas stations have increased from around 190 to 540 naira ($0.4 to $1.2) per liter.
According to a statement released by the Nigerian National Petroleum Corporation (NNPC), the company has adjusted the pump prices of premium motor gases at all of its retail locations to reflect the current situation of the market. As the World Bank reports, more than 80 million people in Nigeria live below the poverty line, and this uncertainty and unexpected upheaval has produced terror among many. Prices at privately operated petrol stations had already begun to increase on Tuesday in anticipation of the early removal of subsidies.
Many would be forced to pay high rates for basic necessities.
This sudden removal of fuel subsidies has caused uneasiness for the people. In Lagos, for example, traffic was halted when queues formed at gas stations. Monday Egbe, a cab driver in Abuja, the nation’s capital, said in a brief interview that he had been able to purchase some petrol but that many people were remaining at home because they “cannot afford that price.” According to him, fares he normally charges for trips of roughly 25 minutes have increased from around 1,500 to 3,500 naira as a result of the current scenario. A tech worker named Usman Ahmed called the scene at the petrol station in the northern city of Kano “madness.”
Ahmed claimed he spent 10,000 naira on 18 liters of gas, meanwhile he would have received 50 liters for the same price previously. Mustapha Hassan, a 45-year-old government employee in the area, expressed concerns about the greater implications of the PMS price hike. Hassan further predicted that the middle class person would be forced to pay far higher rates for basic necessities. Tinubu’s decision to discontinue a deal to prop up fuel prices in Nigeria, the continent’s most populous country and largest economy, had been in effect for some time. Even the previous administration had planned the subsidy spending to last until the end of June.
NLC criticized the decision and called for its immediate reversal.
In spite of its oil wealth, Nigeria’s refining capability is quite limited. They have been subsidizing petrol sales in their own market at the expense of domestic revenue and foreign currency for years. President Tinubu, who had previously promised to end the costly subsidy during his campaign, declared Monday that “fuel subsidy is gone” following his inauguration. This plan was supposed to go into “immediate effect” on Tuesday, but the new administration had previously indicated that it would not because of budget provisions that would remain in place for another month.
It said that “beyond June” the government would be “without funds to continue the subsidy regime”. The NNPC stated that the federal government must “settle up to 2.8 trillion naira (about $6 bn) on subsidies.” The Nigeria Labour Congress (NLC), a federation of unions, has criticized the decision and called for its immediate reversal. NLC further issued a statement saying, “We are appalled by the decision of President Bola Tinubu removing gasoline subsidy without adequate discussions or establishing in place palliative measures.”
The ripple effect is expected to be far-reaching.
While maintaining subsidies primarily benefits the middle class and car owners, doing so helps also keep the cost of transportation low and enjoys widespread support. Attempts by political leaders to get rid of it in the past have been met with resistance, such as the 2012 fuel price protests where the army battled with protesters. In just few days after the fuel subsidy removal was implemented, Nigerians were already complaining about the hardships it had caused. The ripple effect is expected to be far-reaching, influencing prices across all industries and the overall cost of living.