The Independent Media and Policy Initiative (IMPI) has traced the origin of Nigeria’s petrol subsidy regime to the military administrations of General Yakubu Gowon and General Olusegun Obasanjo, arguing that the policy was established during a time of economic prosperity. IMPI explained that both leaders introduced the subsidy as a temporary measure to mitigate the effects of rising international oil prices caused by actions taken by the Organization of Petroleum Exporting Countries (OPEC).

Speaking at a press conference in Abuja, IMPI Chairman Chief Niyi Akinsiju highlighted that the subsidy was initially designed as a short-term fiscal solution. He noted that during periods of economic downturn, the logical response would be to discontinue such measures, as their continued application distorts the economy. Akinsiju expressed disappointment with labor unions, which he believes are overly critical of the current government’s decision to remove the subsidy, even though many Nigerians had long supported its removal before 2023.

Akinsiju further explained that Obasanjo, as a military head of state, formalized the petrol subsidy, making the government responsible for setting fuel prices and ensuring they were not sold above a fixed rate. This move was intended to protect Nigerians from fluctuating global oil prices. However, he noted that even under Gowon and Obasanjo, petrol prices increased in response to economic realities. During Gowon’s administration, the price of petrol rose by 40%, from six kobo per litre to nine kobo, while under Obasanjo, it increased by 70%, from nine kobo to 15.3 kobo per litre.

IMPI’s stance is that subsidies were introduced during periods of fiscal abundance as a means to redistribute wealth among Nigerians. However, in times of economic hardship, continuing the subsidy distorts the market, and its removal should be expected. Akinsiju lamented that subsidies have become ingrained in Nigeria’s economic framework, likening them to “economic Siamese twins” with the country. Attempts to end the subsidy since 1988 have been met with public outrage, despite changes in the economic circumstances that originally justified the policy.

Akinsiju also addressed the current protests over fuel price hikes, pointing out that the Nigeria Labour Congress (NLC) has once again taken a leading role in opposing the government. He called for an end to what he termed “trouble-mongering,” suggesting that the criticism of the federal government for the fuel price increase is misplaced. IMPI believes that the ongoing uproar is part of a recurring pattern and does not align with the evolving economic realities that necessitate such policy changes.