TITLE PAGE

“STRATEGIES FOR TAKING THE BENEFITS OF OIL SUBSIDY TO

THE HIGHEST NUMBER OF NIGERIANS”

BODY OF WORK

Nigeria, one of the largest oil producing countries in the world do export

barrels of crude oil to other countries and later import the refined products of

this crude oil for the consumption of the masses. To make life more

comfortable even to the common Nigerian, the prices of these petroleum

products are subsidized. Unfortunately, some of the benefits of this subsidy

are enjoyed by a few numbers of Nigerians due to their having a high

purchasing power and being able to manipulate the economy. It is given to a

small group of people. The greater Nigerian people are not benefiting from

it. For this and some other reasons, there have been arguments recently for

and against the removal of this oil subsidy. The topic is therefore trying to

tell us to map out plans or strategies that can ensure that the benefits

accruing from oil subsidy will be enjoyed by a larger number of Nigerians,

mostly the average Nigerians and not just to a selected few.

Subsidy can be defined as money paid, especially by the government

to keep prices lower than market values. Oil subsidy therefore, is a measure

that keeps level and above market level for producers or simply reduces

costs for consumers and producers as well. Some of the benefits of the oil

subsidy are;
 It helps reduce the cost of living which is good for a lower-income family

thereby helping in poverty alleviation.

 Helps in maintaining employment

 Oil subsidy also leads to effective productivity in the nation, especially in

cases where there is need for energy generation in order to be productive.

 It doesn’t give room for private companies to be involved and that keeps

the masses from being exploited.

Even at this and some other benefits not mentioned above, the oil

subsidy benefits the rich more. In cases of electricity for instance, richer

households consume more energy due to the high spending power when a

low-income household cannot afford to do same. This problem now flaws

the main aim and essence of implementing the subsidy and also tells us that

the government needs to adopt some strategies and policies for the benefits

of oil subsidy to get to a higher population. Some of the proposed strategies

include;

 Income rise- if the government can ensure that a higher percentage of

Nigerians earn a high income, it will go along way in giving a higher

number of Nigerians the benefits of oil subsidy because it increases

their purchasing power. On the long run, there may even be no need for

oil subsidy again.

 Employment- one of the major causes of poverty is unemployment. If

job opportunities are created and the percentage of unemployment is

reduced drastically, then our aim can be achieved.

 One of the petroleum products mainly consumed by a higher number of

Nigerian especially, the poor households which they use for lighting

and cooking is kerosene and its price is higher than some other

products. The government can help in this situation by providing a

larger subsidy for kerosene than for all other fuels. If it will cause more

problems in the expenditure of the government on subsidy, the price

removed from kerosene can be added to the other products.

 The government can also introduce a scheme that permits a certain class

of user [the poor households] to buy a limited amount of some oil

products at a more reduced rate [discount] daily. This scheme can be

realized in many ways. Take for instance, technologically, through the

means of maybe making available the use of smart cards for the users

[the poor households] and providing them with some daily percentage

discounts on any petroleum product they buy. In order to ensure a

proper implementation of this scheme, government’s filling stations

should be made available in many locations and there should also be an

 accurate lists of low-income households [most especially, households in

the rural areas] to ensure that only the needy are included.

 People in the urban areas can afford to buy these oil products at the

filling stations which are so available in the city, while in the rural areas

where mostly low-income families reside, these filling stations are

lacking thereby subjecting the people to exploration by the retail sellers

usually called ‘‘black market’’. This simply means that they buy these

products at a higher price compared to the people who have more

spending power. This amounts to taking away the little the poor

households have when the rich are spending a more little amount on the

same product. With regards to this problem, the government should

build filling stations in the rural areas to afford the residents some

comfort. Social amenities like electricity should be provided for in the

rural areas.

In summary, the oil subsidy is really a good policy that has sustained

the poor and afforded the common Nigerian a little comfort directly or

indirectly and is worthy of appraisal. I think that with some of the strategies

mentioned and explained above being implemented, the benefits of oil

subsidy will be taken to the highest number of Nigerians.

 BIBLIOGRAPHY

Konjima, et al Abuses “In Fuel Markets; How to Protect Consumer and

Public”, 2001.273

Konjima, Masami and Robert Bacon. “Phasing Out Subsidies Recent

Experiences with Fuel in Developing Countries”, 2001. 310.

Nicholson, et al “Oil and Gas Journal” 99[17], 2001. 15

 BIOGRAPHY

Name: Chinedu Emeka Samuel

Address: University Of Nigeria, Nsukka
Telephone No: 07036607978
Email Address: Diamondssr4eva@Yahoo.Co.uk