Essays on Petrol Subsidies in Nigeria Case Study

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The paper “ Petrol Subsidies in Nigeria” is a thoughtful example of the case study on macro & microeconomics. Over the years, Nigeria has been subsidizing its local refined petroleum needs. This has been happened despite it being one of the leading exporters of crude unrefined oil. As a matter of fact, Nigeria produces an average of two million barrels per day, however, due to corruption and mismanagement, most of its oil refineries are in a bad state and can barely meet the ever-rising oil demand of the second-largest African economy. Ordinary Nigerians believe that low-cost fuel is the only favor they genuinely get from their central government.

The subsidies have ensured that pump prices are as low as $0.40 per liter in a nation where a considerable size of its population survives on less than two dollars a day (“ The Economist” )Although Nigeria is the biggest petroleum producer in Africa, the majority of the oil produced is usually exported in an unrefined form. Due to decades of corruption and poor governance, the country lacks proper infrastructure and refineries necessary to refine the oil not only for export but for meeting local consumption, thus resulting in the importation of refined oil products.

Secondly, Nigeria unnecessarily consumes a huge amount of oil, this is due to the nation's erratic main grid electricity supply leaving the majority to rely on power generators for both domestic and industrial use. Successive leadership has tried with no success to regulate the oil industry. The various government leaderships believed that by deregulating the fuel subsidies and imports it could save about $6 billion dollars. In addition, this regulation was not only proving to be unsustainable in the long run, but it was increasingly draining the public funds.

Many believed that that this regulation only benefited the private oil-importing firms. The government promised that in return the Nigerians would get the new infrastructure and better electricity network. However, the local Nigerians population lacked confidence in the leadership as most of the recovered money would easily be embezzled by the political leaders.

References

““The Economist””

Lecture Notes

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