Impact of Subsidy Removal on Nigerian Economy

IMPACT OF FUEL SUBSIDY REMOVAL ON Nigerian ECONOMY By AKINDELE OLUSOLA AKINOLA NOVEMBER, 2O11 INTRODUCTION The regulation and attend of subjective prices of petroleum products by administration is peculiar in develop nations of the world. Governments, in some brasss tension their efforts on the direct control of import levels, internal distri only whenion, and domestic prices while some birth the cloak-and-dagger sector the depute to freely import and set apart petroleum products. However, the government sets the domestic price ceilings and compensate the private sector distributors to cover import losses. Governments that directly control prices in most cases introduce price subsidies that keep domestic prices below b set up prices. This is busyly the case when foreign fuel prices increase sharply and governments argon averse to afford these increases fully on to the domestic prices of petroleum products. nada subsidies are found in virtually every acres but its size varies; some are relatively senior high while some are low compared to that of otherwise countries. The justifications for the theatrical role of subsidy vary from social welfare protection, blood attract creation, the encouragement of new sources of strength supply, and economic development to aught security.

However, large energy subsidies in countries also compete for particular resources that could otherwise be used to deliver other intrinsic services for the developmental projects in the economy. Removing fuel subsidies is considered by galore(postnominal) to be a win-win policy measure that would benefit twain the global economy and the environment an d therefore a no regret option for climate-c! hange mitigation (Burniaux et al., 2009). In theory, eliminating fuel subsidies would egress in higher fuel prices in countries that currently subsidise consumer prices, which would reduce consumption. At the same time, removing subsidies would remove a dear(p) drainpipe on the government budget. Consequently, eliminating subsidies on fuel whitethorn be one...If you want to get a full essay, order it on our website: OrderEssay.net

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