DYNAMICS OF FUEL SUBSIDY REMOVAL AND ITS IMPACTS ON TRANSPORT DECISION – MAKING AMONG LOWER-INCOME NIGERIANS: A CONCEPTUAL REVIEW.

Abstract

Over the years the issue of fuel subsidy removal has been a subject of intense debate among stakeholders in Nigeria. It has generated controversy because of the expected backlash it will have on the low-income groups that utilizes public transport system as the sole source of mobility. Removal of fuel subsidy is also expected to directly influenced production cost, and increase prices of manufactured products.  Nigeria has a chequered history at attempts to reform key sectors of the economy in the past, and this has created fears in certain quarters on the sustainability of the present exercise. This study provided a desk review on the various attempts that the country has made to reform the downstream sector of the petroleum industry, why it failed, and how to avoid such booby traps in the latest attempts. The study also dispassionately examined the concerns raised by the labor and other stakeholders that the reform will inflicts damage on the poor through loss of employment, reduction in income, spending a larger portion of their income on transportation expenses, and reduced access to basic social services, and increases in prices. For these reasons, the policy has received so much criticism from labor, academia, and individuals. The study conclude by advocating for a holistic reform of the public transportation system in a way to make it more accessible, and affordable to the low-income earners. The expansion of the Bus Rapid System (BRT) or its local variant to more Nigerian cities could be one of the options the government should consider. Also the introduction of targeted transport subsidies for the poorest segment of the population by providing fare discount on trips taken on BRT should be considered.