Consumers groan amidst price increase fueled by subsidy removal

Last Friday, just two days after the new government announced the removal of the fuel subsidy, Mrs. Peace Joseph stopped at the popular Goodwill rice depot at Ipodo, Ikeja to confirm the price of rice.

The sales lady simply addressed as Funke told her that 50kg bag of imported long grain rice was selling for N35,000, while the short grain was selling for N33,000. Similarly a 50kg bag of locally grown rice was selling for N32,000.

As she drove off, she wondered as she has done several times in the past how a bag of rice she was buying for between N8,000-N10,000 even in 2015 was now close to N40,000. How did Nigeria ever get to this dangerous precipice? She wondered aloud.

Going back to the same shop the next day armed with N35,000, to her amazement, the same sales lady she met the previous day, apologetically informed her that the rice was now selling for N37,000. She told her that there was additional N2,000 added to all the brands of rice. Why the sudden price increment? The angry buyer asked rather furiously and was informed that the new price was as a result of the hike in pump price of fuel and transport fare.

The removal of fuel subsidy in Nigeria resulted in a significant rise in transportation costs and food prices across the country, impacting the daily lives of Nigerians. The retail cost of fuel determines the cost of almost every good and service in Nigeria.

In Lagos, Nigeria’s commercial nerve centre, the pump price of petrol shot up significantly, with some filling stations selling as high as N600 per litre.

Rashidi Lawal, a tricycle driver, plies the Iyana-Iba to Mile 2 route. He said that he now buys fuel of at least N12,000 daily.

The driver, popularly called ‘Kosoro 1’, said that when the announcement was made, transport workers doubled the fare the following day to meet the present reality.

He explained that transport fares along the Mile 2-Iyana Iba route cost N200 before the government announced subsidy removal, but the bus fare now costs N300.

“We are likely to take it back to N400 tomorrow. Before now, N7,000 fuel could take you around for the day, but not anymore,” he said.

“Most of us here don’t sleep at home; our houses are far. But what can we do? We sometimes sleep inside ‘Korope’ instead of going home.”

A ginger seller who identified herself simply as Mama Haliya said that she was hopeful that the new administration would do better and put smiles on the face of the masses, but the reverse has been the case. “They said Tinubu has been sworn in, there ought to be a positive difference, but now people (customers) aren’t even coming,” she quipped.

In the nation’s capital city, transport fares shot up by over 100 per cent on many routes as motorists lamented the increase in pump prices.

Investigations revealed that transport fare from Wuse Zone 2 to Wuse market that was previously N300 shot up to N600, while the fare for a trip with others in a cab from Aco Estate, Airport Road, to the secretariat that was N250, rose to N500.

Meanwhile, e-hailing companies have notified customers within the week, informing them of an increase due to the development. A ride in Bolt or Uber from Wuse Zone 2 to Wuye or Wuse 2 that generally would be N700 and N800 now goes for N1,500 or N1,700.

Although the queues have disappeared at filling stations in the city, fares for intrastate and interstate commuting increased significantly as pump prices shot up to N540 per litre. Meanwhile, investigations revealed that Kano Line Transportation hiked its fares on various routes across northern Nigerian cities amid uncertainties over the petroleum subsidy removal.

On Thursday, in a circular approved by its Director of Finance, Sani Dan-Abdul, the agency announced the increment in transportation fares in line with “market realities”.

The fare from Kano to Abuja was increased from N3,500 to N5,000, while Borno moved from N4,000 to N5,500, Adamawa from 5,000 to N7,000, Taraba from N6,000 to N8,000, Gombe from N3,000 to N4,500, Bauchi from N2000 to N3,000, Niger from N4,000 to N5,500, Benue from N7000 to N8,000, and Nasarawa from N5,000 to N7,000.

Though Kano Line motor parks host government-owned vehicles, mostly buses, other privately owned vehicles operate in the parks at a higher price than the government fixed price.

In the Katsina metropolis, although the state government directed the State Transport Authority (KSTA) not to increase fares, commercial motor parks in the state have raised transportation fares by at least N1000.

Investigations also revealed that the famous Akwa IbomTransport Company Park located at Itam Industrial Layout, a new price regime had emerged. For instance, the transport fare from Uyo to Aba increased from N1500 to N2100, while the fare for Uyo to Calabar increased from N3100 to N4,500.

For northern states like Kaduna and Jos, the fares increased from N17,000 to N22,000, representing a 29.4 per cent hike.

A commercial driver in Enugu, Arinze Nwachukwu, said the subsidy removal policy affected their earnings drastically.

Mr. Nwachukwu said since the subsidy removal was effected, he would return from a trip only to realise that he had spent nearly the whole money he made from passengers on buying fuel even as attempts by some drivers to increase the fares forced a drop in patronage. “Passengers are no longer coming. Look at our park. It is empty,” he lamented.

This year, the immediate past government only provided budgetary allocation for petrol subsidy until 30 June, after saying it would leave the incoming administration to make a final decision on the matter.

Opponents of the removal have, however, argued that it would increase the prices of goods and services and further impoverish millions of citizens.

“You cannot remove subsidy without offering to reduce the waste in government,” said Oluseun Onigbinde, Director at Budget IT, a nonprofit and transparency watchdog.