Abstract

This project work is on fuel subsidy removal and its effects on the Nigerian university students, especially those of the Niger Delta University. Fuel subsidy removal refers to the removal of government assistance on payment to the importation of fuel. Fuel subsidy policy was first introduced in (1985) during the Ibrahim Babangida administration to temporarily stabilize the price of petroleum due to our failed refineries. The removal of fuel subsidy by the president Jonathan administration triggered protest by Nigerians who argued that fuel subsidy represents the only benefits they enjoy from the nation’s huge resource endowment. The Nigerian government on the other hand, insisted that fuel subsidy removal is necessary in order to conserve enough fund for development. However, this research work proposed that fuel subsidy has a negative effect on the Nigerian university students, especially those of the Niger Delta University. The system theory was adopted. Additionally, this project work made use of the secondary and observational method of data collection. Thus, at the end, data collected revealed that fuel subsidy benefited only a privileged few in Nigeria and this led to its removal. The removal of fuel subsidy triggered an increase in the prices of goods and services which had a negative effect on the Nigerian university students especially those of the Niger Delta University.

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CHAPTER ONE

INTRODUCTION


1.1    Background of Study

Though Nigeria is considered as a federal State, federalism in Nigeria is said to be an aberration as there was no time the various ethnic groups or regions came together and draw -up a social contract on equal terms and condition (Etekpe 2005:2).

Apparently, therefore, an attempt to understand certain evolving social, political and economic phenomena in Nigeria would be better appreciated if viewed from the perspective of the nature of our social formation.

According to Etekpe (2005:26) “ if you want to find out why certain things are going wrong in Nigeria, go back to our history from 1945-1960, you will see traces of it. The history will show how the country adopted federalism and how it is practiced against its ideal framework’’.

It is based on this that the fuel subsidy removal by the president Jonathan administration on 01 January, 2012, sparked off negative reaction by Nigerians.

Prior to the introduction of fuel subsidy by the Ibrahim Babangida administration in 1985, prices of petroleum product was not uniform across the country. This is attributed to geographical spread of the country which marketers put into consideration in terms of price in supplying the product to the various parts or regions of the country.

Thus, the demand for a uniform price across the state by the people from those regions, particularly the Northern region where the price of fuel was relatively high, contributed in part to the introduction of fuel subsidy by the Babangida regime.

The above point was supported by Ewah (2012:1) when he noted that:

  • The fuel subsidy payment was introduced as a policy in Nigeria during the IBB administration of when our refineries failed due to non – maintenance. It was introduce to temporarily stabilize the price of petroleum product across the nation while the refineries underwent rehabilitation.

Fuel subsidy is a form of price manipulation whereby the government fixes the pump price of fuel for sale to consumers and pays the retailer the difference between the actual market price and the regulated or official price per liter. (Llyobhere cited in luper, 2012:2).

The introduction of fuel subsidy which was supposed to last for only six (6) mouth, the Babangida administration then issued licenses to lift, import and market oil to friends of his administration, who happen to be mainly from the Hausa – Fulani stock of Northern region.

When the newly formed oil cabal of Hausa – Fulani hegemonists saw that they were making billions of petro-dollars as profit from the fuel subsidy payment, they frustrated every effort channeled into rehabilitation of the refineries. Thus, the policy that was mean’t to last for six month has now lasted for almost thirty 24 years ( Ewah, 2012:1).

Eweh further observed that it is on record that the IBBs, the Danjumas, the Abachas, the Otedolas, the Dantatas, the Aremus, the Abubakars, the Dangotes and the Sewoes all own refineries in neighboring African countries; and that those who don’t own refineries outrightly ,all have substantial stake in refineries in neighboring countries. The Yorubas got a little percentage of the bounty, while every other Nigerians tribes / regions were alienated by the Hausa – Fulani cabals (Ewah, 2012).

These newly formed oil marketers, rather than operating the fuel subsidy payment for the interest of Nigerians, they were busy feasting on the fuel subsidy fund, costing government to the tune of N 1.24 trillion per year.
This observation was properly noted by Agbaegbu (cited in Etekpe, 2012:13) that “during the fuel subsidy probe by the House of Representatives Adhoc committee on fuel subsidy, chaired by Faronk Lawan , 71(G.17) high profile companies, along with their principal share holders were indicted”. According to him:

  • The report stated that the G.17Jointly collected N230.165billion of PMS volume of 3,262,964,225 litres of fuel that was not supplied.

He went further to observe that in presenting the report for debate in the House of Representatives, the chairman, Farouk Lawan said that;

Claims made by the G.17 could not be verified as deports into which they purportedly discharged the products could not confirm receipts….In some instances, there were wide gap between the date that the importer claimed to have discharge the product and the date receipt was confirmed from the deport some claims to volume discharge made by some of the marketers differed significantly from the volume received at deports.

Thus, these increasing incidences of corruption and mismanagement of fuel subsidy payment which rose to the tune of N1.24 trillion could no longer be sustained by Government and this led to President Goodluck Ebele Jonathan’s attempt to remove fuel subsidy and raised the pump price to N140 litre in January 2012. This prompted an instant reaction from Nigerians who went on strike/protest for over a week before the government and the people agreed on a compromised price of N97/litre (Etekpe, 2012:12).

The foregoing arguments were corroborated by Obayi et al ( 2012:12)that “the argument by government has been that it spends huge sum of money to subsidize oil importation, and that the presidency claimed to have spent about N640 billion on oil subsidy last year”.

Though, while it may be argued that the fuel subsidy protest by Nigerians is based on their argument that fuel subsidy removal will further exacerbate their already impoverish condition as a result of the attendant increase in the prices of goods and services, most of the protests were organised by those oil cabals who feel that their source of plundering the nations’ wealth has been blocked by the federal government and want it reversed.

Ewah (2012) corroborated this observation when he noted that, “the supper rich cabals are fighting for their lives; they are using their stolen money to buy mass – action against the president’s subsidy removal policy”.
The foregoing discussions point to the fact that though the arguments about the rationale for the removal of fuel subsidy by the federal government is still much a life, there are some few individuals who are the beneficiaries of fuel subsidy payment at the expense of the Nigerian masses.

1.2    Statement of the Problem

The issue of fuel subsidy removal by successive administration since 1984 has remained a reoccurring decimal in Nigeria. Its attendance effect as a result of the accompanied increase in the prices of goods and services each time fuel price is increased had been a source of crisis between the federal government and the Nigeria people.

As argued by Ajanaku (2012:54) “In April 1988, student demonstrated at 33 universities in Nigeria against fuel price increase, which was demanded by International Monetary Fund (I M F) – inspired S A P”.

However, as observed by Okigbo and Enekebe (2012:2). “Federal government has since 1978 steadily increased the price of fuel from N0.08 in 1978 to N65.00 in 2009 to N141 in 2012. Yet, expected improvement in the welfare of the people has not been achieved”.

Over the same period, national poverty level has steadily increased from 28% in 1980 to 64.4% in 2009. Currently compound annual growth rate of fuel price has been 23. 29% while GDP at constant prices increased by only 3.99 (Okigbo and Enekebe, 2012).

As a result of the fuel subsidy removal this time around, experts are of the view that Nigeria misery index, unemployment will rise correspondingly if the situation continues (Nnodin, 2012:25). The misery index measures the level of hardship in a country and is calculated using the unemployment and inflation rate of that country.

The inability of the federal government to deliver on their much promised development each time fuel price is increased has also help to dispel the reliance of Nigerians on the Subsidy Re-investment scheme (SURE-P) canvassed by government as the measure that will help cushion the negative effect of this policy on the masses.
With the increase in the prices of goods and services as a result of the fuel subsidy removal, it is pathetic to know that Nigerian university students have been negatively affected as they have to pay exorbitantly for goods and services from their little income as they seek to realize their academic dreams and aspirations.

The pro-subsidy removal group, mainly the three tiers of government, claimed that fuel subsidy burden is growing fast and cannot be sustained in its current form. They also argued that fuel subsidy should be removed to enable federal government conserve enough fund for economic development. This, they argued, is necessary so as to save the nations’ economy from collapse, since fuel subsidy fund has risen to the tune of N1.24 trillion per year and will continue to rise.

The anti-fuel subsidy removal group on the other hand, which represent the Nigerian people, argued that fuel subsidy remain the only benefit Nigerians get from the country’s rich crude oil endowment. They also insist that an increase in the general price level will adversely affect all aspects of life with the harshest impact on the poor (Okigbo and Enekebe, 2012:3).

It is worrisome that several Nigerians felt that while has the government not been able to identify and prosecute these “cabals” who are feasting on the fuel subsidy payment at the expense of the masses? Or are they bigger than Nigeria?

However, while these questions and arguments between the pro-subsidy removal and anti-subsidy removal groups had remain largely unresolved, much is really unknown and said about its impact on the Nigerian university students.

It is on this basis that the researcher seeks to interrogate the rationale behind the fuel subsidy removal and its effect on the Nigerian university students.

1.3    Objectives of the Study

The objective of this study includes;

  1. To examine the rationale for the subsidy removal and its effect on Nigerian university students.
  2. To identify the beneficiaries of fuel subsidy.
  3. To recommend how to redress the effect of fuel subsidy removal.

1.4    Significance of the Study

It is expected that this study will contribute to the debate about the rationale for the fuel subsidy removal.
It is also expected to serve as a reference material to those who want to research in future about the rationale for the removal of fuel subsidy and its effect on Nigerian university students.

1.5    Research Questions

The research questions that this project seeks to examine includes;

  1. What is the rationale for the fuel subsidy removal?
  2. Who are the beneficiaries of the fuel subsidy?
  3. Why has government not taken appropriate measures to prosecute those that have been alleged to have hijacked and siphon the fuel subsidy payment?

1.6    Theoretical Framework

We adopted the system theory propounded by David Easton in 1953. (Ndoh, 2009:18). He defined the political system as the system of interactions in any society through which binding or authoritative decision are made and implemented.

To him, the political system exist within an environment of other systems- physical, biological, social, economical, psychological etc, which affect it and are in turn affected by the political system. (Anifowese and Enemuo, 1999:21).

According to Easton, the political system functions by getting or receiving inputs from the environment in form of demand, expectations and support. These inputs from the environment undergo a conversion process within the political system and return back as output, which are usually authoritative or binding decisions from government. A feedback mechanism put output back into the system as inputs thus completing a complex chain of cyclical operation (Ndoh, 2009:18).

In the light of the above, the fuel subsidy removal which represents an output from the political system to the political environment, generate protest from the environment as an input back to the political system as a result of its effect on the Nigerian masses.

Nigerians protest of the policy output is based on their argument that fuel subsidy removal will further exercabate their already impoverished condition (Okigbo and Enekebe, 2011:2). Thus, their agitations which represent an input back to the political system is that government should revert back to the old price of N65.00 per litre.
In the same vein, the fuel subsidy protest which represent an input from the political environment also have an effect on the political system. According to Akanbi and Agbo (2012:21):

The effect of the crippling strike and protests was profound on the nations’ money market as banks remain under lock and key while strike last. The central bank Lamido Sanusi put the loss incurred during the strike at $617 million daily, translating into about N100 billion.

Fuel subsidy came as a policy output into the environment as a response to an input demand from the environment for a uniformity or stability in the price of fuel across the nation (Ewah, 2012).

The fraud and mismanagement of the fuel subsidy payment resulted to the fuel subsidy removal as a policy output back into the environment. This prompted an instant reaction from Nigerians as they went on strike/protest for over a week before the government and the people agreed on a compromise price of N97/litre (Etekpe, 2012:120).

Thus, the protest/strike which represents an input demand back to the political system passes through a conversion process which was later feedback into the environment as an output in the form of a reduction to N97/litre from the initial price of N141 per litre.

Although government and the people seem to have arrived at a compromise, the impact is still been felt by Nigerians.

1.7   Research Preposition

The study wish to propose;

⦁ That the fuel subsidy removal had a negative effect on Nigerian university students, especially, those of the Niger Delta University.

1.8     Scope and Limitation of the Study

This research work is specifically on the fuel subsidy removal and its effect on Nigerian University Students, with emphasis on the Niger Delta University.

The research was constrained in terms of difficulties in getting the needed information from relevant sources, especially within the short time frame. There was also the problem of financial constrain and co-operation from relevant person in terms of getting relevant information for this work.

1.9   Definition of Terms

The following terms are defined for clarity of purpose.

Fuel Subsidy

According to Babalola (2012:2), he defined fuel subsidy within the context of Nigeria as:

The amount spent or paid by the government to importers of petrol to ensure that the price at which it is sold to Nigerians on the street is affordable as against the full price it would have attracted without the said subsidy.
In other words, it is the difference between the landing cost of petrol imported into Nigeria for sale and the actual price it is sold at the various filling stations.

In this sense, if it cost about N141.00 to import a litre of petrol in Nigeria, government would have to pay each importer a sum of N 76.00 on every litre so as to keep the pump price at N65.00 per liter.

Federalism

Federation as a concept elicits different definitions by various scholars. However, we have adopted that of Shridath .S. Ramphal who defined federalism as;

A pragmatic method of organizing government so that sovereignty and political power are combined within a single nation of several territorial units but are so distributed between national and unit governments that each within its own sphere is substantially independent of the other.

This implies that though each unit is united at the centre, there is the prevalence of social, cultural and economical differences among the various subordinate regions.

 

 

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