Nigeria to Remove Fuel Subsidy, President Acknowledges Challenges

President Bola Tinubu of Nigeria has announced the removal of the long-standing petrol subsidy, acknowledging that this decision will place additional burdens on citizens but is necessary for allocating more funds to critical sectors like education, power supply, transportation infrastructure, and healthcare.

In his address on Democracy Day, President Tinubu expressed awareness of the challenges this decision would bring to the Nigerian populace. He stated, “I admit that the decision will impose extra burden on the masses of our people. I feel your pain.”

The subsidy, which has kept petrol prices low for decades in Africa’s largest economy, has become increasingly expensive for the country. Last year, the government spent $10 billion on the subsidy, contributing to wider budget deficits and escalating government debt.

The removal of the subsidy has led to a near tripling of petrol prices in Nigeria, resulting in discontent among unions, increased transport costs, and impact on small businesses and households that rely on petrol generators due to erratic power supply from the grid.

This announcement marks the first public comment by President Tinubu on the subsidy removal since his inauguration on May 29. He urged Nigerians to endure the decision as a means to “save our country from going under,” promising significant investments in essential public utilities to improve living standards. However, no specific timeline for these developments was provided.

The oil subsidy was initially introduced in the 1970s to offset the impact of rising global oil prices and was formalized in 1977 under the Olusegun Obasanjo military regime with the Price Control Act.

Scrapping the fuel subsidy was a key promise in President Tinubu’s election campaign. The subsidy removal has previously sparked controversy, most notably in January 2012 under then-President Goodluck Jonathan, leading to widespread protests.

Labor unions, while angered by the recent decision, have suspended an indefinite strike following discussions with the government. They are advocating for a substantial increase in the monthly minimum wage, among other demands.

Rating agencies like Fitch and Moody’s have viewed the President’s stance on confronting the fuel subsidy and his plans to unify the country’s multiple exchange rates as positive steps for the Nigerian economy.

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