Petroleum Subsidy Removal and equitable socio-economic allocation of the benefits: A prescription for Nigeria

Abstract: The petroleum product subsidies intended to serve as a means of resource allocation to support the less privilege in the society, turned out to be a disappointment as, with most developing economies, the subsidy programme, turned out to be only beneficial to the rich and the middle class. The paper noted that the subsidy was fraught with massive corruption through smuggling and improper and inaccurate declaration of the actual quantity of petroleum product was being imported and subsidized. This all added to the colossal cost of over $30 billion as subsidy payment in the past 18 years. The huge subsidy bills were financed through government budget and borrowed funds, resulting in debt service to revenue ratio of some 102% in 2022. The Petroleum Industry Act, PIA, of August 2021 abrogated the subsidy programme, which would have ceased since February 2022, but was extended to end June 2023 by the former Mohammadu Buhari Administration. The Asiwaju Bola Ahmed Tinubu’s government took the bull by the horn, and officially removed the petroleum subsidy during his inaugural speech on May 29, 2023. This was after several unsuccessful attempts by previous governments which were resisted with national protests. Just immediately, the prices of petroleum product, especially the gasoline, or premium motor spirit, PMS, or commonly called Petrol, shot up by more than 200% from N185 to N 617 per litre.  Prices of goods and services, especially road transportation, went spirally up also, with threats of protests across the country.  This paper observed that the Asiwaju Bola Ahmed Tinubu failed to adopt globally accepted subsidy removal plans through extensive citizen engagement, sensitization, and robust implementation plans on how to utilize and allocate the accrued benefits from the subsidy removal. Regardless, this paper recommended for government to draw up subsidy removal implementation programmes at all levels, that will spell out how the funds will be utilized and accounted for with monthly reports for the public to ensure transparency and accountability. Finally, the paper pointed out some key focus areas for government in their implementation plan such as providing mass transit, greener transportation, financing fiscal deficits, reducing the debt burden, and encouraging investments in the downstream sector of the industry.

Keywords: Subsidy, Petroleum Industry Act, Petroleum Products, Smuggling, Debt Service to Revenue Ration.

Title: Petroleum Subsidy Removal and equitable socio-economic allocation of the benefits: A prescription for Nigeria

Author: DR. AMIEYEOFORI VALENTINE FELIX

International Journal of Social Science and Humanities Research 

ISSN 2348-3156 (Print), ISSN 2348-3164 (online)

Vol. 11, Issue 3, July 2023 - September 2023

Page No: 83-101

Research Publish Journals

Website: www.researchpublish.com

Published Date: 08-August-2023

DOI: https://doi.org/10.5281/zenodo.8223953

Paper Download Link (Source)

https://www.researchpublish.com/papers/petroleum-subsidy-removal-and-equitable-socio-economic-allocation-of-the-benefits-a-prescription-for-nigeria