If you’ve been following the news or scrolling through social media immediately after the taking over of the new government of Nigeria under Ahmed Bola Tinubu, you should’ve remembered the first nation news headline “Fuel Subsidy Is Gone”.

Now, Here’s The Politics Behind Fuel Subsidy Removal

Now here is the simple politics behind Nigeria’s government decision to remove fuel subsidy. Before we proceed, here are the biggest questions – is it really the solution Nigeria needs? Or are we being told a white lie to justify a move that will only benefit the elites? Why have we not experienced a positive impact on our economy since after the removal of this fuel subsidy.

The fuel subsidy has been a significant part of Nigeria’s budget for years. It was introduced to make petrol affordable for the average Nigerian. However, over time, Baba and his government have always emphasized that the subsidy has brought a massive drain on the government’s treasury, contributing to Nigeria’s standing debt.

The administration argues that eliminating the fuel subsidy is essential to freeing up crucial resources for indispensable sectors such as infrastructure, education, and healthcare. But as with most political decisions, there’s always more behind the scenes. While the government is framing this as a much-needed economic shift, one cannot help but question: Who truly stands to benefit from this policy, and who will ultimately bear the weight of its repercussions?  The ₦100,000,000 immediately shared each among Nigerian Senators as a token under senate President Akpabio was from which funds?

Who Are The Beneficiaries Of The Fuel Subsidy?

As the government positions the removal of the fuel subsidy as a game-changer, we can’t overlook the fact that certain individuals will be making huge profits from this move. The looming question here is who these beneficiaries are and why they would be feeding fat off this decision. Stay close because we’ll be looking into that shortly. 

The Current President of Nigeria 

At the heart of this financial resolution lies Bola Ahmed Tinubu, Nigeria’s president and leader of the All Progressives Congress (APC). Tinubu, popularly known as Jagaban, needs no introduction in Nigerian politics. His vast network of influence spans the political, economic, and social spheres. But what’s his real stake in the removal of the fuel subsidy? 

As president, Tinubu has publicly endorsed the decision, asserting that it will conserve government resources and catalyze economic growth. However, a closer examination reveals a more complex picture. News from unexposed sources had it that Tinubu’s wealth and political power have been intricately tied to Nigeria’s oil sector. Tinubu has long-standing connections to Oando, one of Nigeria’s largest indigenous oil companies, and his business ventures extend into the gas and energy sectors.

By abolishing the subsidy, the government effectively deregulates fuel prices, allowing oil companies to operate freely, potentially leading to higher profits for those with close ties to the administration. Critics argue that this is just another example of how the new subsidy policy serves the interests of the political and business elite.

Lawmakers from The National Assembly

Nigerian lawmakers have largely supported the removal of the fuel subsidy. But what exactly is their role in this decision, and what do they stand to gain? It might interest you to know that many members of the National Assembly have substantial investments in the oil sector. In fact, they’ve been often accused of mismanaging public funds and allowing corruption to thrive, especially in the oil and gas industry. Some even have business ties with multinational oil companies operating in the country.

While the National Assembly may appear to be a democratic body advocating for the welfare of Nigerians, the sad reality is that many lawmakers are driven by self-interest. Some have been accused of secretly supporting the deregulation of fuel prices because it aligns with their business interests. In a non-subsidized system,  fuel prices can be adjusted at will, allowing them to make more money from their investments in the oil industry.

The IMF and World Bank

It’s no secret that international financial institutions like the International Monetary Fund (IMF) and the World Bank have long advised Nigeria to remove the fuel subsidy. They’ve constantly stated that the subsidy drains Nigeria’s resources, contributing to an inordinately inflated budget and a lack of fiscal discipline. While there may be some truth to these claims, the IMF and World Bank’s seemingly kind interest in Nigeria’s economic policies isn’t as benevolent as it appears.

For years, the IMF has pressured Nigeria to adopt market-driven policies, such as fuel price liberalization, to serve as a condition for loans and aid packages. But these policies don’t account for Nigeria’s unique socio-economic realities. The IMF’s insistence on removing the subsidy is primarily motivated by a desire to diminish Nigeria’s reliance on state-funded support, freeing up resources for debt repayment and advancing neoliberal reforms. Unfortunately, the average Nigerian is left to shoulder the burdens of these policies, with little to no safety nets in place to protect the most vulnerable citizens.

Economic Ramifications on The Populace 

When the government first announced the removal of the fuel subsidy, they presented it as a necessary sacrifice, a step that would ultimately usher in a brighter future for Nigeria. The government had claimed that subsidy removal would help build a more diversified economy that isn’t overly reliant on oil revenues. But is the pain of removing the subsidy truly worth the potential long-term gain? The immediate repercussions are palpable. Fuel prices have soared, catapulting the costs of transportation, food, and other essential services to unprecedented heights. According to Nigeria’s National Bureau of Statistics (NBS), inflation rates have surged, with the cost of living rising dramatically daily. 

For many Nigerians, fuel subsidy removal means having to make painful choices.  With inflation on the rise, families are cutting back on basic amenities such as food and healthcare, struggling to make ends meet. The middle class feels the squeeze, and the Nigerians at the lowest food chain level are squeezed even tighter, facing a bleaker future.

While the government reassures the public that this subsidy removal will pave the way for a brighter, more prosperous tomorrow, the stark reality is that the average Nigerian today is drowning under the weight of soaring costs. How many will genuinely reap the rewards of this policy in the long run when their purchasing power remains in steady decline, even as their earnings are expected to rise.

Oil Majors and How They Benefit from Subsidy Removal

As the average Nigerian grapples with the dire effects of the recent subsidy removal, the nation’s oil giants appear largely unaffected and even positioned for gain. Major players in the industry, such as Shell, Chevron, and ExxonMobil, are likely to reap significant financial benefits from this policy shift, as they are now allowed to set fuel prices without regulatory constraints. This newfound freedom could lead to their profit margins swelling significantly, potentially at the expense of everyday citizens. 

Many observers are concerned that this deregulation process is a strategic avenue for oil cartels to consolidate their influence over the Nigerian fuel market. With the government stepping back, there are fears that these corporations will exploit their market power to hike prices, exacerbating the populace’s economic challenges. The implications of this shift extend beyond mere price changes; they touch on broader issues of market control, economic disparity, and the overall welfare of a population that is already struggling with financial uncertainty.

For ages, the government has promised to overhaul the sector, but little has been done to address the root causes of inefficiency and corruption. Instead of focusing on reforming the sector and addressing these systemic issues, the government opted for subsidy removal instead, handing over even more control to the oil cartels.

Oil moguls like Femi Otedola, Aliko Dangote, and Mike Adenuga have accumulated vast fortunes from the treasures of Nigeria’s oil industry, and the deregulation of fuel prices only strengthens their grip on the industry.

How Nigerians Are Reacting to the Fuel Price Hikes

The removal of the fuel subsidy has sparked protests and public outcry nationwide. Trade unions, political activists, and individuals have taken to the streets to voice their anger at the government’s decision. The Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) have threatened nationwide strikes, and many Nigerians are calling for the government to reconsider its stance on the subsidy.

While the government may argue that the policy is necessary for the country’s long-term prosperity, we can’t deny the fact that Nigerians are frustrated and angry. They feel betrayed by a government that they believe is more interested in bringing economic development and sustainable growth, rather they prioritise international lenders and oil companies than addressing the needs of their innocent citizens.

Question: Can Subsidy Removal Lead to Economic Reform?

Supporters of the fuel subsidy removal believe that this bold move will ultimately breathe new life into the economy by reallocating resources to essential sectors that have long been neglected. But can we truly place our trust in this claim?

The government has assured citizens that the funds saved from lifting the subsidy will be funneled into much-needed infrastructure and public services. Yet, reality tells a different tale—past administrations have repeatedly been tested and forced to remove fuel subsidies, but since the vision of the reality of development from this fund wasn’t clear, they couldn’t admit to playing such drama on the citizens. But that was until Baba Ahmed Tinubu came into power.

Now, the most pressing question remains – will Nigeria’s economy significantly benefit from this policy, or will it serve to further enrich the Three Arms of government alone leaving the poor masses unattended to?