Energy and Power
p-ISSN: 2163-159X e-ISSN: 2163-1603
2013; 3(4): 37-43
doi:10.5923/j.ep.20130304.01
Akinwale Y. O., Olaopa O.R., Ogundari I., Siyanbola W. O
National Center for Technology Management, Obafemi Awolowo University, Ile-Ife, Nigeria
Correspondence to: Akinwale Y. O., National Center for Technology Management, Obafemi Awolowo University, Ile-Ife, Nigeria.
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One of the contentious issues in Nigeria is the removal of fuel subsidy on Petroleum Motor Spirit (PMS). The purpose of this paper is to evaluate the argument for and against subsidy removal. An empirical investigation of the impact of fuel subsidy removal on fuel consumption was conducted using Least Square method. The result of the twenty six years under review shows that subsidy removal will reduce fuel consumption which will lead to efficient fuel demand and reduction in carbon emission. The money saved can be used for transforming the economy by building infrastructure, establishing new refineries and maintaining the old ones through improved technology management among others. However, the study also shows that there are weak and non-transparent institutional frameworks which cause lack of credibility and trusts of the government by the citizens. This study therefore recommends that that fuel subsidy should be removed gradually instead of one-off and that government should provide a strong and transparent institutional framework as well as a sound infrastructure for her citizens before subsidy is totally phased out in Nigeria.
Keywords: Subsidy, Fuel, Phase-Out, Nigeria, Price
Cite this paper: Akinwale Y. O., Olaopa O.R., Ogundari I., Siyanbola W. O, Political Economy of Phasing out Fuel Subsidy in Nigeria, Energy and Power, Vol. 3 No. 4, 2013, pp. 37-43. doi: 10.5923/j.ep.20130304.01.
![]() | Figure 1. Diagram showing the Effect of a Producer Subsidy |
![]() | Figure 2. Diagram showing the amount spent on Subsidy |
![]() | Figure 3. Diagram showing the Cost-Benefit Analysis of subsidies |
![]() | Figure 4. Oil Price Subsidy |
![]() | Figure 5. Impact of subsidy phase-out on global primary energy demand |
![]() | Figure 6. Impact of Subsidy phase-out on global energy-related CO2 emissions |
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