Subsidy, as we all know, is an amount of money paid by the government on a particular product to help the civilian ease the actual economic value of the item, and in a situation where the government decided to remove such a subsidy, that would literally leave the civilian in a mess because, going forward, they'll need to pay more to get what they originally got at a subsidies rate.
Such was the case in my country, Nigeria, since yesterday, when a new president was appointed to office, one of his key implementations was to state that the fuel subsidy effect in the nation would be removed. The news caused havoc within the country as fuel retailers took that opportunity to hike the price of petroleum, leaving the citizens in pain and inability to access fuel.
This isn't the time to push blame around; I guess I'll state that in another article, but given the fact that my country is a case study, it's worthy of note that the subsidy hasn't actually been removed because the then president already made provisions for a subsidy that runs till the end of next month's, and since that is the case, the private sector selling these fuels is the actual enemy of the people because they've already purchased the fuel at a subsidy rate. Why are they selling at a high rate if not for their greed and wickedness?
The imminent danger of subsidy removal are:
- Hike in price of petro and other items: One of the major negative impacts of this subsidy removal is that it'll lead to an increase in the price of gasoline and other items, just as we are already experiencing. Some are selling as high as ₦600 while others are selling a little lower; this isn't fair because fuel ought to be sold at ₦185 until the end of June, when the subsidy duration will expire.
- Scarcity of Gasoline: Another negative impact is that most gasoline dealers are harboring gasoline in their reservoirs rather than selling it to the general public; this, I believe, is done to maximize the profit they'll get from selling it when the subsidy is no longer active.
- Hardship and inflation: Subsidy removal, hike in price, and harboring of gasoline will only lead to hardship for the citizens due to the high demand and little or no supply to meet up with the demand rate. These have already led to an increase in transport fares and the price of some items in the market.
The way forward:
- Investment in an alternative: One of the key ways forward that should be put in place to curb the effect of the subsidy removal is to invest in other related sectors that will reduce the dependence on petroleum, such as electricity, solar power, the building of modern electronic trains, and motorist transportation systems.
- Arresting greedy business owners who hike prices: To tell the truth, the sole purpose of starting a business is to make profit, but when it's too much or affecting the citizens, then it's more of a steal than just business, so since subsidy has been paid to cover till the end of next month's, it'll be awesome if the government can send out their team to shut down any filling station selling at a high rate or harboring gasoline in their reservoir. I see some said they already did this, but it'll be better if all states join forces to do the same.
That's all from my perspective on the dangers of subsidy removal for citizens and the way forward to curb the impact.
Thanks for your time, stay bless.