On the average, transport fare by bus within Nigerian cities has increased by 72 percent in the last one year, despite the Nigerian government’s obsession in keeping Nigerians with cheap petrol through an opaque subsidy regime.
The 72 percent rise in the cost of transportation across Nigerian cities means that commuters, who have mostly been hit by inflation and other economic woes, have had to pay almost double what they paid a year ago as transportation fares.
The above development is ironic considering most supporters of cheap fuel believe Nigeria’s costly but highly popular fuel subsidy program is the only “benefits” the masses enjoy from the government.
Despite fixing the pump price of petrol at N162 per litre, data gleaned from the National Bureau of Statistics (NBS) showed the average fare paid by Nigerian commuters for a bus journey within the city spiked by 72.6percent year-on-year in April 2021 to stand at N386.1.
According to the report, it increased from N223.71 recorded in April 2020 to an average of N386.1 in April 2021. It also represents a 2.34percent increase when compared to N377.27 paid by commuters in March 2021.
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“Subsidies are a hot topic because it is politically unpopular to reduce them, however, the program only benefits the rich and not the poor,” A professor of economics and former president of Nigerian Association for Energy Economics (NAEE), Wummi Iledare said.
The NBS further reports that, in the period under review, states with the highest bus fares within cities were Zamfara (N620.35), Bauchi (N600.35), and Nasarawa of N500.23 while States with the lowest bus journey fare within city include Oyo (N200.07), Abia (N215.04), and Borno (N263.45).
Also, it was more expensive travelling from the Federal Capital Territory (FCT), Sokoto, and Lagos states to other cities as intercity fares were highest in these three states: Abuja FCT (N4,594.21), Lagos (N3,500.20), and Sokoto (N3,340.30).
NBS data showed the average fare paid by commuters for a journey by motorcycle per drop surged by 86.41percent year-on-year from N148.22 recorded in April 2020 to N276.3 in April 2021.
“Nigerians are spending more on transportation, so what’s the economic sense in petrol subsidy,” Iledare said.
Against common sense and market dynamics, the Nigerian government is continuing with unsustainable payment of N120 billion fuel subsidy for the month of June despite calls by the Nigerian Governors’ Forum for full deregulation of the petroleum downstream sector.
The continuation of the subsidy would not only reduce federal allocations to states, but it would also perpetuate an opaque system that robs Nigeria’s poor.
Most experts say subsidies intended to reach the poor are often economically inefficient because richer households use more fuel and benefit much more from the subsidy, while poor households are only able to afford a small amount, even at subsidized rates.
