In barely over a year, Nigeria’s President Bola Tinubu’s reform policies, particularly the petrol price hike, have been mostly controversial.
The reforms began shortly after Tinubu assumed office in May 2023. Government said then that they were well-intended to stabilize Nigeria’s economy and reduce government spending.
However, many Nigerians are no longer comfortable with such arguments. To them, the resulting increase in the cost of living has only deepened the hardships faced by ordinary citizens.
This article traces the origin of Tinubu’s petrol price hike, explores the counter-arguments, examines alternative options, and suggests possible solutions.
The Beginning of Tinubu’s Petrol Price Hike Reform.
Tinubu’s reform policies started immediately after his inauguration. His first task was removing fuel subsidies, a long-term drain on Nigeria’s finances.
The subsidy system, which kept petrol prices artificially low, was seen by many as a source of corruption. It was no longer desirable and must not be sustained.
Tinubu, himself, argued that the subsidies cost the government billions of naira each year. It would have benefitted the nation more if injected into infrastructure, healthcare, and education.
Although the president said casually during his inauguration on May 29, 2023 that “fuel subsidy is gone”, the official pronouncement came in June. That declaration sparked a sharp increase in petrol prices across the country till date.
The Counter-Arguments to Tinubu’s Reform Policies and Petrol price Hike
Initially, it was easy for government to explain that the petrol price hike was a necessary step to free up funds for development projects and to stabilize the economy.
However, the immediate impact on the cost of living has countered any perceived benefits. Life suddenly became regrettably dire, shortly after. Transportation costs are soaring daily, inflation are ever skywards, prices of goods and services spike in tandem. Life in Tinubu’s reform era has become increasingly unbearable.
Critics of Tinubu’s reform policies rightly argue that the petrol price hike has inflicted unnecessary hardship on Nigerians. The worse hit are those in the lower-income brackets.
The removal of the subsidy, they say, was poorly timed and haphazardly implemented. Many insist it came at a time when inflation was already high and many Nigerians were struggling for survival.
True, the sudden increase in petrol prices has led to widespread discontent. On a daily, many Nigerians question the government’s sincerity. They also doubt the Tinubu’s understanding of the challenges faced by the ordinary people. No caring government would inflict so much hardship on its citizens, they argue.
Those opposing the fuel Tinubu’s petrol price hike say the government has failed. “Why introduce a reform without adequate measures in place to cushion its sharp impact?” they ask.
The actual figures of naira racked in from the fuel subsidy remains sketchy. But Tinubu’s administration has repeatedly promised to reinvest the savings from the subsidy removal into social welfare programs. He made th most recent promise during the nationwide hunger strike across the nation between August 1 and 10.
But critics point out that the promised programs have been slow to materialize. With nothing tangible to fall back on, many Nigerians agonizingly bear the brunt of the increased costs on their own.
Exploring the Options of Tinubu’s Petrol Price Hike
In response to the backlash against Tinubu’s reform policies, some experts have suggested alternative approaches that could achieve the same economic goals without causing such widespread hardship.
One option: phase out the subsidy gradually and allow the consumers more time to adjust. This approach could help mitigate the sharp shock of the price increase. Ultimately, it would reduce the immediate impact on the cost of living.
Another alternative is to implement targeted subsidies that benefit only the most vulnerable populations. Focusing support on those who need it most, some argue, could reduce the overall subsidy burden. That, of course, should not stop government from still providing some relief to low-income households.
So far, Tinubu’s much-touted programmes aimed at cushioning the negative effects of the fuel subsidy include students’ loan, distribution of essential food items to vulnerable communities, buses, etc. But they have either been slow in coming or mired in scandals.
Yet another alternative, the government should explore ways to increase domestic fuel production and reduce Nigeria’s reliance on imported fuel.
Boosting local refining capacity can reduce the cost of fuel and lessen the impact of global oil price fluctuations on domestic prices. The unanswered question then is: Why is it so difficult for Nigeria to fix its major refineries in Warri, Port Harcourt and Kaduna? Port Harcourt has the capacity of 150,000 bpd, Warri 125,000 bpd and Kaduna 110,00 bpd.
The advent of the Dangote Refinery heralded much hope as a solution to the crisi in Nigeria’s petroleum sector. But the controversy involving the regulatory authorities in the sector has left much to be desired.
Balancing Tinubu’s Reform With Social Welfare
President Tinubu has to find a balance between the need for economic reform and protecting the welfare of the citizens. That is the challenge he has to boldly confront to ameliorate the burden on the Nigerian masses.
Perhaps, the removal of the fuel subsidy may have been a necessary step to stabilize the economy. But the government must also take steps to mitigate the negative impact on the population.
One possible solution: accelerate the implementation of social welfare programs to provide immediate relief to those hardest hit by the price hike.
For instance, adopt targeted supports approach. Properly implemented cash transfers, food assistance, and subsidies for public transportation. Those will likely help to ease the burden on low-income households.
Additionally, the government must increase investment in public infrastructure. Sincere and conscious investments in transportation and energy will help reduce the overall cost of living.
Improving access to affordable public services can also help offset the impact of higher fuel prices. Such efforts will contribute to improve the quality of life for most Nigerians.
The Path Forward for Tinubu’s Reform Policies
The petrol price hike, from inception, represented a significant but controversial shift in Nigeria’s economic strategy. And its resultant negative effects are compounded by the absence of a functional public transport system. Today, it is common to see many Nigerians either resorting to bicycles or trekking.
Nigerians consume about 70 litres of petrol daily, according to reports. 1 barrel of petrol contains 159 litres. Kaduna Refinery alone with its 110,ooo barrels translates into 17,490,000 litres. That means Kaduna Refinery alone, for instance, can serve Nigeria on daily basis. With such alternative, there would be no need for the sudden petrol price hike.
While the long-term benefits of the Tinubu reforms are still uncertain, the immediate negative impacts on ordinary Nigerians have been severe.
Hence, the government must explore alternative options to protect the most vulnerable. That perhaps, will help many endure till the policies achieve their intended goals.
The road to a stable and prosperous future for Nigeria lies in striking a balance between economic reforms and social welfare.
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