Fuel Price Surge: Unraveling the Impending Economic Crisis in Nigeria

By Ogba Precious Ewomazino

The announcement of Nigeria’s new president came as a shock, but what followed in the early days of his reign shattered the remaining hope for the nation’s people.
     
However, in his inauguration speech on May 29, 2023, Nigerian President Bola Ahmed Tinubu (BAT) declared the end of fuel subsidies, causing the price of fuel to soar from #210 to #550 per liter. As feared, this move has triggered a chain reaction of economic repercussions across the country. With the Nigerian economy heavily reliant on crude oil and its derivatives, the increased fuel price has led to a surge in the cost of living, affecting transportation, education, food, and housing. This article delves into the consequences of fuel price escalation to #700 per liter, as predicted by the Independent Petroleum Marketers Association of Nigeria, and discusses potential solutions to mitigate its impact on citizens and businesses.
   
Sometimes, people confuse “Fuel subsidy” to “Fuel Price”. So, before we delve into the implications of the fuel price hike, it’s essential to grasp the concept of fuel subsidies. Governments implement fuel subsidies to alleviate the burden of exorbitant gasoline and diesel prices on the general public. These subsidies provide monetary assistance or incentives to offset the high costs of fuel products, thereby ensuring affordable energy for citizens.
 
However, as global oil prices became increasingly high, sustaining fuel subsidies became challenging for many governments. Nigeria, being an oil-producing nation, had long relied on fuel subsidies as a means of social welfare and political stability. Nonetheless, as global oil prices fluctuated and domestic demand for petroleum products alarmed, the cost of maintaining these subsidies grew unsustainable for the government’s budget.

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The hike in fuel price has led to high level of financial discomfort. If fuel prices were to surge from #550 to #700 per liter, the cost of transportation would become even more unaffordable for the average citizen. This would lead to difficulties for people in reaching their destinations, resulting in travel time restrictions and a lack of flexibility.
     
Public transportation fares would likely rise, affecting daily passengers who heavily rely on buses, taxis, and motorcycles (popularly known as “okadas”) to get to work, school, or other destinations.

Students, especially those funding their own higher education or hailing from financially unstable backgrounds, would face significant challenges attending classes regularly. The higher cost of transportation would curtail their ability to commute to universities, leading to academic setbacks and a lack of progress.
     
On the other hand, the increase in fuel prices would have a profound effect on food prices in the market, exacerbating hunger and malnutrition among the populace. The rise in food prices, including staples like rice, would disproportionately affect both the rich and the poor. Citizens’ budgets would be strained as more funds are diverted to basic sustenance, leaving little for other essential expenses.
Furthermore, the increase in fuel prices may tempt traders and business owners to inflate the prices of goods and services to maximize profits and meet financial obligations. This unethical practice could lead to an economic imbalance, disproportionately affecting consumers and perpetuating inflation. However, higher food prices could also impact the nutrition and health of the population. As affordability diminishes, people may resort to cheaper, less nutritious options, leading to an increase in malnutrition and related health issues. A population deprived of adequate nutrition can face compromised productivity, lower educational attainment, and increased susceptibility to diseases.

The construction industry would also be hit hard by escalating fuel prices, resulting in a scarcity of building materials. This, in turn, would drive up the costs of construction projects, making it challenging for individuals to build homes or initiate new ventures. The adverse effect on the construction sector would ripple through the economy, hampering overall growth.
   
Hopefully, if the government are ready to avoid the dire consequences of fuel price increases, the government must take proactive measures to support its citizens and the country’s economy. This could involve implementing targeted subsidies for essential goods, revising taxation policies, and promoting sustainable alternatives to reduce dependence on fossil fuels.
   
In a nutshell, as the specter of #700 per liter fuel looms, Nigeria faces an imminent economic crisis that could touch every aspect of its citizens’ lives. From education to transportation, food to housing, and inflation to trader practices, the repercussions are far-reaching and deeply concerning. However, with careful planning and decisive action, the government can mitigate the impact of this crisis and chart a path toward a more stable and prosperous future for all Nigerians.