Fuel subsidy removal: “I better pass my neighbour” users might be worst hit
0In the current debate over fuel subsidy removal in Nigeria, much has been discussed on the impact of the subsidy removal on transportation prices and on the overall price of goods in the country.
However, a much less discussed impact of the fuel subsidy removal is its impact on Nigerian Generator owners.
In a different economic setting, the impact of fuel subsidy removal on this demographic might not be as significant but in Nigeria’s poor power supply environment, the impact will be significant and immediate.
With poor power supply, many Nigerian small and medium scale enterprises (the true engines powering the economy) rely on generator power from small cheap generator brands, popularly known as “I better pass my neighbour.”
In 2010, President Jonathan revealedthat “Generating power from generators adds more than 40 percent to the cost of goods and services in Nigeria” and that Nigeria spends about N1.95 trillion yearly running generators.
With negligible progress made in the area of power generation, the increased fuel cost will pose an additional strain on entrepreneurship in the country. In addition, many more Nigerian homes, unable to afford the new petrol price will be forced to do away with the luxury of fueling their generators.
Ironically, part of the fuel subsidy proceeds will be used on the Federal Government’s You Win program to boost entrepreneurship in the country.
See: How subsidy proceeds will be spent – Okonjo Iweala
However, will this be enough to offset the skyrocketing cost of fueling generators that the fuel subsidy removal will engender?
See also
Why refineries don’t work – Jonathan
