A number of developed and developing countries have engaged in fuel subsidy policy reforms. These countries include: Argentina, Brazil, Canada, China, Senegal, India, Indonesia, Italy, Korea, Mexico, Russia, Span, France and the United states.
IISD (2001) maintains that once in place, fuel subsidies are extremely difficult to remove. There is no single observed formula for success, country circumstance and changing global conditions are major contributory factors IISD (2010) recognizes six important reform approaches: Research, parameters, clear frames of progress, and maintaining and evaluation.
The Ghana case is recorded as a substantial success for the following reasons: research was conducted to identify those most likely to be impacted by reform, a communication strategy was employed to increase popular support, semi-independent and transparent institutions were established to manage fuel pricing and policies were implemented to reduce impacts on the poor
(IISD,2010). IISD, (2010) International institute for sustainable development observes that the Senegalese reform experience substantially achieved its initial objectives. The LPG subsidy program, which created strong incentives to switch from charcoal to LPG, yield large environmental benefit. The UNEP (2003) United Nations Environment Programme observes that the Senegalese experience with subsiding LPG demonstrates that rapid switching away from traditional fuels to modern forms of energy does not occur automatically. Palliative measures for the poor ere poorly articulated. Additional unlike in Ghana, the information and awareness raising campaign was not properly done.
The UNEP (2003) through a stimulation studies possible impacts of the reforms and stated that a key conclusion of the analysis for Chile is that removing oil subsidies could have bigger economic and distribution effects than removing coal subsidies. This mainly because consumption of oil is much larger than that of coal.
The Nigerian case is that of the imposition of a consumer surplus whereby the consumer pays for fuel at a price at N65 per litre that is less than the current world market price of imported fuel inclusive of distribution cost of N142 per litre. The comer benefits by also purchasing the commodity/product in quantities that are at variance to the ideal quantities to be demanded by the consumer public. The supplying community (oil marketers) enjoys the products surplus as they are now inclined to sell larger quantities at the market price.
Economic theory postulates that the actual cost of subsidies exceed the actual cost of subsidizes exceed the transfers offered by the government to the producer and consumer community. The Nigerian situation is somewhat peculiar and manifest in a rather intriguing way that almost hints of the notorious Nigerian factor. There is certainly a case for the removal of subsidies in Nigerian.
IISD (2001) maintains that once in place, fuel subsidies are extremely difficult to remove. There is no single observed formula for success, country circumstance and changing global conditions are major contributory factors IISD (2010) recognizes six important reform approaches: Research, parameters, clear frames of progress, and maintaining and evaluation.
The Ghana case is recorded as a substantial success for the following reasons: research was conducted to identify those most likely to be impacted by reform, a communication strategy was employed to increase popular support, semi-independent and transparent institutions were established to manage fuel pricing and policies were implemented to reduce impacts on the poor
(IISD,2010). IISD, (2010) International institute for sustainable development observes that the Senegalese reform experience substantially achieved its initial objectives. The LPG subsidy program, which created strong incentives to switch from charcoal to LPG, yield large environmental benefit. The UNEP (2003) United Nations Environment Programme observes that the Senegalese experience with subsiding LPG demonstrates that rapid switching away from traditional fuels to modern forms of energy does not occur automatically. Palliative measures for the poor ere poorly articulated. Additional unlike in Ghana, the information and awareness raising campaign was not properly done.
The UNEP (2003) through a stimulation studies possible impacts of the reforms and stated that a key conclusion of the analysis for Chile is that removing oil subsidies could have bigger economic and distribution effects than removing coal subsidies. This mainly because consumption of oil is much larger than that of coal.
The Nigerian case is that of the imposition of a consumer surplus whereby the consumer pays for fuel at a price at N65 per litre that is less than the current world market price of imported fuel inclusive of distribution cost of N142 per litre. The comer benefits by also purchasing the commodity/product in quantities that are at variance to the ideal quantities to be demanded by the consumer public. The supplying community (oil marketers) enjoys the products surplus as they are now inclined to sell larger quantities at the market price.
Economic theory postulates that the actual cost of subsidies exceed the actual cost of subsidizes exceed the transfers offered by the government to the producer and consumer community. The Nigerian situation is somewhat peculiar and manifest in a rather intriguing way that almost hints of the notorious Nigerian factor. There is certainly a case for the removal of subsidies in Nigerian.
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