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Economic Sensitivity of Petroleum Subsidy Removal
This paper focuses on Nigeria's efforts to remove subsidies and analyzes the economic conditions surrounding this process. Nigeria has relied heavily on imported petroleum products and has been implementing a petrol subsidy regime for many years. However, the domestic prices of refined petroleum and the subsidy regime are vulnerable to fluctuations in the exchange rate, leading to a significant increase in the subsidy bill over time. This has become unsustainable for the government, prompting the need for subsidy removal. However, it is crucial for the government to adopt a strategic and empathetic approach to minimize the severe socio-economic consequences on Nigerians. The paper also suggests that domestic refining of petroleum should be prioritized as a prerequisite for discontinuing petrol subsidies.
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