By Ibrahim Muhammad S. and Yazid S Mikail
Fuel subsidy removal has been a topic of intense debate in Nigeria for many years, and its implications extend beyond economic considerations to encompass environmental concerns. Nigeria, as Africa’s largest oil producer, has long maintained a fuel subsidy programme aimed at stabilising domestic fuel prices and providing relief for the general population. However, the decision to remove the subsidy has far-reaching consequences for both environmentalists and the Nigerian public at large.
Shortly after the handover and inauguration of the Bola Ahmed Tinubu and Shettima administration, the president approved the removal of fuel subsidies in Nigeria. Despite Nigeria’s abundant oil reserves, the country continues to heavily rely on imported refined petroleum products, which not only puts a strain on its foreign exchange reserves but also leaves the country vulnerable to fluctuations in international oil prices.
The underutilisation of its refineries not only hampers Nigeria’s economic potential but also inhibits job creation and local value addition. Addressing this issue by reviving and modernising the dormant refineries could not only reduce the nation’s dependency on imports but also stimulate economic growth, create employment opportunities, and contribute to the overall development of Nigeria’s energy sector.
For Nigerian environmentalists, the removal of fuel subsidies presents a mixed bag of challenges and opportunities. On one hand, the subsidy removal could potentially encourage a shift towards renewable energy sources and more sustainable transportation systems. With current fuel prices ranging from 500-600 Naira, there may be greater incentive for individuals and businesses to adopt cleaner alternatives such as electric vehicles, biofuels, or solar-powered technologies. This could lead to a reduction in carbon emissions, air pollution, and other negative environmental impacts associated with the combustion of fossil fuels.
Furthermore, the subsidy removal might spur investment in renewable energy infrastructure and encourage the development of a greener economy. The funds previously allocated to fuel subsidies could be redirected towards initiatives promoting renewable energy research and development, energy efficiency programs, towards the implementation of Nigeria’s Energy Transition Plan (ETP) which needs huge investments and the establishment of sustainable transportation systems. Nigerian environmentalists have at this point an opportunity to advocate for these investments to accelerate the transition to a low-carbon future and mitigate the adverse effects of climate change.
On the other hand, the removal of fuel subsidies could also exacerbate certain environmental challenges. Higher fuel prices may discourage some individuals from utilising private vehicles and lead to a shift towards public transportation. Sounds like a great idea. However, Nigeria’s public transportation infrastructure is currently inadequate, especially in rural areas where there is heavy reliance on old, inefficient vehicles that contribute to air pollution. If alternative transportation options are not improved or made readily available, the removal of fuel subsidies could result in increased use of polluting vehicles, thereby harming air quality and public health.
Moreover, the removal of fuel subsidies may have an immediate impact on the general population. The fuel price hike has already triggered inflation, affecting the cost of essential goods and services. Transportation costs increase, which will eventually lead to higher prices for food, healthcare, and other necessities. This could disproportionately affect low-income Nigerians who already struggle to make ends meet. The potential socio-economic implications of the subsidy removal should not be overlooked, as they can contribute to social unrest and political instability.
To ensure a smooth transition and minimise negative consequences, it is crucial for the Nigerian government to adopt a comprehensive strategy to inform its subsidy removal decision. This strategy should include measures to support vulnerable populations especially those affected by the impact of climate change, invest in renewable energy infrastructure, and improve public transportation systems. Subsidy removal should be accompanied by targeted policies that promote sustainable development, energy efficiency, and the growth of green industries.
By doing so, Nigeria can seize the opportunity to become a regional leader in renewable energy and pave the way for a cleaner and more sustainable future. Failure to put such strategies in place could promote poverty and instability for a nation where 63% of persons living within Nigeria (133 million people) are multidimensionally poor, living below the poverty line of $1.90 a day, which is the threshold that determines whether someone is living in poverty. The line is based on the value of goods needed to sustain one adult.
In conclusion, the removal of fuel subsidies in Nigeria carries significant implications for both environmentalists and the general population. While it presents an opportunity for environmentalists to advocate for a shift towards renewable energy sources and a greener economy, it also poses challenges in terms of air pollution and socioeconomic impacts. A well-planned and comprehensive strategy is necessary to ensure that subsidy removal benefits the environment, supports vulnerable populations, and sets Nigeria on a sustainable path for the future.