Fuel Subsidy: New Report with Facts


 Fuel Subsidy: New Report with Facts

A new piece of research from NOI Polls sought to find out how people buy fuel, where they buy it from and how much they buy for. The results confirm what we as Nigerians can probably guess – that people are paying more at the pump than they should. Now, for the first time, we have hard evidence to push forward the stagnant debate over subsidy removal.

This research shows that the official selling price for fuel, which is N97 per litre, is only observed in the regions that include Lagos State and Abuja. More than 40% of people surveyed purchase fuel at the official selling price in those areas. More than 38% of the people surveyed in the rest of the country pay between N110 to N120 for fuel.

Despite the fact that a majority of the geo-political zones pay more than the official selling price for fuel, there is still an aversion to complete removal of the subsidy. 59% of the people surveyed are not in support of the government’s decision to remove fuel subsidy. This is likely linked to the fact that 70% of respondents interviewed nationally say that reduction of fuel subsidy has increased spending in their households.

This research reiterates the fact that the fuel subsidy regime as it is in Nigeria is ineffective. This is demonstrated especially by the evidence that shows that many Nigerians purchase fuel at prices way above the official pump price stipulated after partial-subsidy removal by government. In effect, fuel marketers benefit twice with every Nigerian that purchases fuel above the fuel pump price of N97.

Various reasons were given by respondents as to why they think fuel is sold at different prices in different states. A majority of the people interviewed blamed the differences in fuel pump prices on lack of government monitoring of filling stations outside Abuja and Lagos. 24% attributed the variation in pricing to the cost of importing fuel, which might differ for fuel marketers. 14% blamed the price variations on greedy operators of filling stations who exploit the public by hoarding fuel. .

The reason for the continued aversion to complete removal of subsidy by respondents was not given in this research. Aversion to the subsidy could be due to a lack of or poor quality of information. It could also be due to lack of trust in government’s competence to pass on the benefits of removal back to those most affected as promised. Subsequent research by NOI Polls, expected to be undertaken on a quarterly basis for the rest of the year, will hopefully provide more insight to this.