Under President Bola Tinubu’s administration, Nigeria has seen a drastic reduction in the daily consumption of Premium Motor Spirit (PMS), commonly known as petrol. As of August 20, 2024, data from the Nigerian Midstream and Downstream Product Regulatory Authority (NMDPRA) revealed that daily petrol consumption had plummeted to just 4.5 million liters.
This marks a sharp 92% drop from the 60 million liters consumed daily in May 2023, just before the president took office. The striking decline in fuel use is primarily attributed to the significant increase in petrol prices following the removal of long-standing subsidies, forcing many Nigerians to abandon their vehicles and seek more affordable transportation options.
The removal of petrol subsidies was one of Tinubu’s first major policy decisions upon assuming office on May 29, 2023. Citing the unsustainable financial burden of the subsidies, which had cost the country an estimated N12 trillion over a decade, the president argued that continued subsidy payments were untenable and had contributed to the nation’s mounting debt. In the aftermath, petrol prices surged from N195 per liter to approximately N1,300 per liter, triggering severe economic consequences for millions of Nigerians.
The drastic hike in fuel prices resulted in a cascade of economic effects, notably pushing inflation to a near three-decade high of 34.19% by June 2024, before it slightly eased to 32.7% in September. The elevated cost of living has exacerbated poverty levels, with the World Bank reporting that approximately 129 million Nigerians—56% of the population—are now living below the national poverty line. This figure represents a steep rise from the 40.1% recorded in 2018, underscoring the extent to which inflation has outpaced economic growth, leaving real GDP per capita below levels seen prior to the 2016 oil price-induced recession.
Thus, the sharp decline in petrol consumption has highlighted significant changes in consumer behavior and fuel accessibility across Nigeria.
An analysis of the NMDPRA’s Daily Truck Out Report for August 2024 revealed that out of the 36 states, only 16 received petrol allocations from the Nigerian National Petroleum Company Limited (NNPCL), leading to widespread scarcity. Niger state received the highest allocation, with 21 trucks amounting to 940,000 liters daily, while Lagos followed with 12 trucks totaling 726,001 liters. Kaduna, Oyo, and Kano were also among the states receiving relatively higher allocations. In stark contrast, states such as Gombe, Benue, Ekiti, and Kebbi received only one truck each, translating to severe shortages in many areas.
Although the changing dynamics of the removal of fuel subsidies is resulting in fuel scarcity across the country, the decline in fuel consumption has been largely attributed to unaffordable fuel costs. The economic strain resulting from the fuel price surge has led many Nigerians to abandon personal vehicles due to the prohibitive costs.
The shift in transportation habits is evident in the stories of individuals like Emmanuel, a 72-year-old retired health worker, who has had to adjust to the new reality.
“I parked it at my son’s house. I use public transport now,” Emmanuel told AFP. “It is not convenient, but it is what the economy demands.”
His experience is shared by many, as public transport becomes the more viable alternative amid skyrocketing fuel prices.
The impact on the automotive market has been equally significant, with car dealers in major cities like Lagos and Abuja observing an uptick in the sale of large, fuel-consuming vehicles. According to Maji Abubakar, a car dealer in Abuja, there has been a noticeable trend of people selling off their bigger cars and sports utility vehicles (SUVs) in favor of more fuel-efficient models.
“People are actually selling their big cars these days,” Abubakar told AFP. “The problem is that even if you put them on the market, there isn’t much demand for them.”
He further highlighted that it has been more than a year since he last sold a car with an eight-cylinder engine, attributing this shift primarily to the steep increase in petrol prices.
Although as an advantage, the increased fuel prices have had the unintended effect of potentially curbing illegal activities such as fuel smuggling–as the economic incentive for such activities diminishes with the higher domestic prices, it has also curtailed the ability of many Nigerians to afford driving, leading to low demand.
The economic fallout from the subsidy removal has raised questions about the sustainability of such policies amid widespread poverty and inflation.
A recent World Bank data underscores a worsening poverty situation, with more than half of Nigeria’s population now estimated to live in poverty. The organization’s report noted, “Since 2018, the share of Nigerians living below the national poverty line has risen sharply from 40.1% to 56.0%. This stark increase partly reflects Nigeria’s beleaguered growth record.”
The report added that “multiple shocks in a context of high economic insecurity have deepened and broadened poverty, with over 115 million Nigerians estimated to have been poor in 2023. Since 2018/19, an additional nearly 35 million people have fallen into poverty.”
