The introduction of fuel subsidy by the Nigerian government in 1973 was to reduce the burden of the high price of fuel to encourage energy productivity in the country. This explicit regulation by the government to control inflation and economic shocks caused by unstable international oil prices was strictly an aspect of economic policy guidelines. The rapid rise of petroleum imports over the years necessitated the need for fuel subsidy reforms to boost economic growth to fund critical institutions of the country, such as education and health. Apparently, fuel subsidies superseded government spending, causing the government to borrow to fund critical institutions, thereby increasing the debt profile of the country. Thus, fuel subsidy reforms seemed the only likely solution. Incidentally, the implementation of fuel subsidy reforms in the country has been an issue of socio-economic and political discourse that involves stakeholders and analysts who are for or against the implementation. The socio-economic and political dimension to the fuel subsidy reform debate was a result of certain salient factors. This paper explores the political economy of fuel subsidy reforms in Nigeria, examining how and why political and socio-economic factors influence the implementation of fuel subsidy reforms. Giving the identified reasons and impact of these factors, it was recommended that the government should consider certain social, economic and political factors to mitigate the negative effects of fuel subsidy reforms. Diversification of the economy should be made paramount.
Odubo et al. (Tue,) studied this question.