Author(s) :

OGIDI TIMINERE SAMUEL.

Volume/Issue :

Abstract :

This study, titled Petroleum Subsidy and the Future of Nigeria’s Oil Sector: From Consumer Relief to Market Deregulation, explores the impact of Nigeria's removal of petroleum subsidies on its oil sector and broader economy. The primary objective is to assess the challenges and benefits associated with this market deregulation, with particular attention to its socio-economic consequences for consumers. The research examines the immediate effects of subsidy removal on fuel prices and the cost of living, the influence of deregulation on local refining capacity and sector efficiency, and the socio-economic repercussions on vulnerable populations. It also investigates the potential benefits of a liberalized petroleum market in terms of economic growth, competition, and energy security, while addressing the political and social resistance that has affected the policy’s implementation. The study employs Public Choice Theory to analyze the political behavior surrounding subsidy reforms, highlighting how self-interested actions of political actors, labor unions, and bureaucrats have influenced decision-making processes. This framework explains the persistence of subsidies in the face of economic inefficiencies and the challenges of transitioning to a deregulated market. Using secondary research methods, the study reviews existing literature and data to provide a comprehensive analysis of the policy shift. Key findings reveal that subsidy removal has increased fuel prices and living costs, attracted investment in local refining, and improved sector efficiency, though government mitigation measures for vulnerable populations have been inadequate. Despite the benefits of deregulation, political and social resistance has posed significant challenges. The study concludes by recommending enhanced social support programs, stronger investment incentives, improved communication, policy flexibility, and stakeholder engagement to address the complexities of policy implementation and ensure stability in Nigeria's oil sector. Keywords: Petroleum Subsidy, Nigeria’s Oil Sector, Future, Consumer Relief, Market Deregulation

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