In a remarkable shift under President Bola Tinubu’s administration, Nigeria has witnessed a drastic reduction in daily fuel consumption, with Premium Motor Spirit (PMS) usage plummeting by 92% within one year of his tenure. This significant drop has raised questions about the long-term impact of Tinubu’s economic policies, particularly the removal of fuel subsidies and their effect on Nigeria’s fuel distribution landscape.
According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s (NMDPRA) Daily Truck Out Report, as of August 20, 2024, the daily petrol consumption stood at 4.5 million litres. This represents a staggering decrease from the 60 million litres consumed per day in May 2023, just before Tinubu assumed office. The sharp reduction highlights a profound shift in the country’s fuel demand, a trend attributed to Tinubu’s decisive policy changes.
The Fuel Subsidy Removal and Economic Fallout
On May 29, 2023, President Tinubu announced the removal of fuel subsidies, marking an end to a decade-long policy that had cost the country over ₦12 trillion in 10 years. Tinubu argued that the subsidy system was no longer sustainable and had plunged the nation into severe debt. However, the immediate consequence was a surge in petrol prices, jumping from ₦195 per litre to around ₦1,300 per litre, further straining household incomes and sending inflation to a 30-year high of 34.19% by June 2024. Although inflation has eased to 32.7% by September, the economic burden remains significant, with the World Bank reporting that 129 million Nigerians now live in poverty, a dramatic rise from 40.1% of the population in 2018 to 56% in 2024.
Fuel Distribution and Limited Access Across States
Further analysis of the NMDPRA report reveals that only 16 of Nigeria’s 36 states received fuel allocations in August 2024, leaving the remaining 20 states grappling with scarcity. Niger State received the highest allocation with 21 trucks, supplying 940,000 litres daily. Lagos followed closely with 12 trucks, providing 726,001 litres, while Kaduna also received 12 trucks, amounting to 454,001 litres. States like Sokoto, Ogun, and Benue received as little as one to four trucks, severely limiting their access to fuel and contributing to regional disparities in supply.
The Economic Ripple Effect
The removal of subsidies and the resulting surge in fuel prices have not only affected fuel consumption but have also reshaped consumer behaviour. Many Nigerians, unable to cope with skyrocketing prices, have resorted to abandoning their vehicles. Car dealers in Lagos and Abuja report a growing trend of people trading in fuel-guzzling cars for more fuel-efficient models or relying entirely on public transportation. Maji Abubakar, a car dealer in Abuja, noted that demand for cars with larger engines, such as SUVs, has dropped significantly. “It’s been over a year since I sold a car with an eight-cylinder engine. The price of petrol is the main reason,” he explained.
Poverty and Rising Inflation
As fuel prices soared, the cost of living has surged, plunging millions of Nigerians deeper into poverty. According to the World Bank, 129 million Nigerians are now living below the poverty line, marking an increase of nearly 35 million people since 2018. This rise in poverty levels has been exacerbated by a combination of inflation and slow economic growth. Food prices have skyrocketed, further reducing the purchasing power of households, particularly in regions already struggling with limited access to fuel.
A Call for Economic Reforms
The World Bank has stressed the need for long-term economic reforms, urging Nigeria to commit to structural changes over the next 10 to 15 years to promote sustainable growth. However, the slow pace of reforms and the deepening economic challenges suggest that the path ahead may be more difficult than anticipated. Tinubu’s economic policies, though bold, have triggered immediate hardships for many Nigerians, particularly in the absence of adequate social safety nets.
The Lasting Impact of Fuel Subsidy Removal
Nigeria’s 92% reduction in daily fuel consumption under President Tinubu underscores the profound impact of his economic decisions. While the removal of fuel subsidies may have been necessary to address long-standing fiscal challenges, the immediate consequences—fuel scarcity, rising poverty, and inflation—pose serious questions about the sustainability of the reforms. As Nigeria grapples with these changes, the focus now shifts to how the country can balance immediate economic relief with long-term growth strategies.
