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ID132652
Title ProperImpacts of removing fuel import subsidies in Nigeria on poverty
LanguageENG
AuthorSiddig, Khalid ;  Aguiar, Angel ;  Grethe, Harald ;  Minor, Peter, Walmsley, Terrie
Publication2014.
Summary / Abstract (Note)The petroleum sector contributes substantially to the Nigerian economy; however, the potential benefits are diminished due to the existence of significant subsidies on imports of petroleum products. Subsidies on imported petroleum products are considered to be an important instrument for keeping fuel prices, and hence the cost of living, low. The costs of these subsidies, however, has risen dramatically in recent years due to increased volatility in world petroleum and petroleum product prices and increased illegal exportation of subsidized petroleum products into neighboring countries. Removing the subsidy on fuel is one of the most contentious socio-economic policy issues in Nigeria today. In this paper, an economy-wide framework is used to identify the impact of removing the fuel subsidy on the Nigerian economy and investigates how alternative policies might be used to meet socio-economic objectives related to fuel subsidies. The results show that while a reduction in the subsidy generally results in an increase in Nigerian GDP, it can have a detrimental impact on household income, and in particular on poor households. Accompanying the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products can alleviate the negative impacts on household income.
`In' analytical NoteEnergy Policy Vol.69, No. ; Jun.2014: p.165-178
Journal SourceEnergy Policy Vol.69, No. ; Jun.2014: p.165-178
Key WordsNigeria ;  Fuel Subsidy ;  Poverty ;  Income Distribution ;  Economy-Wide Framework ;  Nigerian Economy ;  Economic Policy ;  Household Income ;  Energy Policy ;  Socio-Economic Policy