Policy of Fuel Subsidy Removal in Nigeria: Problems, Prospects and ways Forward

Abstract

Energy subsidy most especially fuel subsidy, which is the focus of this study, has a long history and has been used in various ways across the world with varying results. There are many different reasons for adding or removing subsidies. Environmental concerns, global commerce, and preserving competitiveness are the key forces behind policy in industrialized economies. While the primary motivations for the introduction of subsidy in developing nations such as Nigeria is welfare, the reduction of poverty, and electoral politics but it became a burden on Nigeria’s economy due to fraud, corruption, and smuggling. This led to the subsidy removal policy to save the country’s economy and divert the budget to other critical sectors of the economy such as infrastructure, health, and education. The aforementioned issues are motivating factors geared towards identifying the challenges and prospects of the policy and also develop ways forward or recommendations for effective implementation of the policy. Documentary research method was adopted as secondary sources of data were used. Content analysis and logical inference was adopted as tool for data analysis. The research is anchored on structural functionalism as its theoretical framework. The findings of the study is that instead of the benefits the citizens were expecting from its implementation it turned to affect the citizens negatively, no obvious arrangement were made by the government to alleviate the future hardship envisaged in the policy implementation among others. The paper recommends that government at all levels should as a matter of urgency review the policy of subsidy removal and to provide a well structured palliatives alleviate the suffering of the citizenry, to mention but a few.