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  • Name: AUDIENCE_ PERCEPTION _OF FEDERAL_ GOVERNMENT_ REMOVAL _OF FUEL_ SUBSIDY _IN_ JANUARY_ 2012
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ABSTRACT

The aim of this study was to investigate Audience perception of federal government removal of fuel subsidy in Enugu metropolis. Three main research questions were formulated for the purpose of this study and other sub questions aimed at prying into audience perception, causes and effects of fuel subsidy removal in Nigeria. Survey research method was used because of its convenience, reliability and cheapness. The study population was Enugu Metropolis. A total of 200 respondents were selected, using the purposive random sampling. The number of retrieved questionnaire was 195, representing 97.5% response rate. Statistical analyses of data collected were performed using, frequency distribution, percentages, tables while Chi-square formula was used to test the formulated hypothesis. Results revealed that audience perceived the removal of oil subsidy as an act of selfishness, wickedness and the federal government means of promoting their selfish interest, thereby making the masses to suffer. Corruption in the oil sector and gross mismanagement and also due to few corrupt individuals that are united to promote their private interest among other factors have been found to be the reasons and causes for the removal of fuel subsidy. These in turn have led to increase in prices of fuel pump oil products; increase in prices of food commodities, transportation and increase in operating costs of micro and small enterprises. The researcher recommends that there was a significant relationship between fuel subsidy removal and cost standard of living of the general populace. She suggested that the federal government should look into other sectors of the economy such as agriculture, tourism etc. in other to boost the economy.

TABLE OF CONTENTS

Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables vii
Abstract viii

CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 4
1.5Scope of the Study 4
1.6 Significance of the Study 4
1.7 Operational Definition of Trems

CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 6 2.2 Review of concepts 6
2.2.1 Concept of Perception 6
2.2.2 Concept of Fuel Subsidy Removal 8

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2.2.3 Concept of Deregulation 11
2.3 The evolution of fuel subsidy in Nigeria. 12

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2.4 The History of fuel subsidy removal in Nigeria 13
2.5 Reasons/Causes of fuel subsidy removal 15
2.6 The effects/impacts of subsidy removal on Nigerian economy 17
2.7 Theoretical framework 23
2.8 Summary of literature Review 24
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 25
3.2 Research Design 25
3.3 Population of the Study 25
3.4 Sample Size and Sampling Technique 26
3.5 Description of the Research Instrument 26
3.6 Validity of Data Gathering Instrument 37
3.7 Method of Data Collection 27
3.8 Method of Data Analysis 27

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction 28
4.2 Data Presentation and Analysis 28
4.3 Test of Hypothesis 43
4.4 Discussion of Findings 44

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction 52
5.2 Summary 52

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5.3 Conclusion 53
5.4 Recommendations 53
References 56 Appendix A 57 Appendix B 58

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study
For some number of years, Nigeria enjoyed subsidy on petroleum products. This came to an end
on January 1st, 2012, after a declaration from President Goodluck Jonathan that afterwards, the
subsidy was to be removed (Zaccheus, 2011). In Nigeria, the issue of appropriate pricing of
petroleum product has always been a controversial policy issue. Successive governments have
dealt with this problem to no avail. Suffix to say that in Nigeria, subsidy removal implemented
by governments had always yielded negative effects on the citizens. According to Centre for
Public Policy Alternatives (2012), a subsidy by definition is any measure that keeps the prices

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consumers pay for a good or product below market levels for consumers or for producers above
market. The essence of having subsidy in place for products and services is that it has direct
positive impact on poverty reduction in the lives of the poor masses who could not afford
high prices (Nwaoga and Casimir, 2013).
Subsidies were introduced in the Nigerian energy sector in the mid 1980‟s. Something of a
creeping phenomenon, the value of the subsidies has gone from 1 billion in the 1980s to an
expected 6 billion Dollars in 2011. In this period the specific products targeted for subsidy have
changed. Diesel oil has had its associated subsidy redacted while petrol, gasoline; kerosene
continues to enjoy a 54.4 % subsidy over the international spot market price at the Nigerian
pump. Economists believed that social welfare is maximized when the price of each good and
service is freely determined by the interaction of buyers and sellers in open competitive markets.
In practice and especially in developing countries however, policy is often driven more by
political consideration than rational economic theory. The risk of social unrest, street riots, and
threats of civil war very easily make introduction of market distorting policies justified. Nigeria
as a case in point is under increased pressures to grow its economy. Yet countervailing forces of
corruption, mismanagement of public resources and poor governance conspire to frustrate efforts
to sustain growth in the face of rising population numbers and demands for a democratic
dividend by the citizenry (Centre for Public Policy Alternatives, 2012).
According to Centre for Public Policy Alternatives, the justifications for introduction or removal
of subsidies vary markedly. In developed economies Environmental issues, international trade
and maintaining competitiveness are the main drivers of policy. Whereas welfare, poverty
alleviation and election cycle politics largely underpin the reasons for which subsidies are
introduced in developing countries. A new factor in the current mix of policy drivers is the

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renewed emphasis on governance reform championed by the Bretton woods institutions-The
World Bank, IMF and the donor community. Lending urgency to this scenario is the global
economic downturn and consequent rationalization by lenders, aid granting countries. As
domestic demand for funds increase in these countries amounts available for aid, FDI and
subsidies diminish. The consequence is a demand for greater efficacy in the economies of the aid
receiving countries of which Nigeria is one.
Furthermore, the issue of fuel subsidy removal has torn this nation into two factions, the
government and the economic experts on one hand and the masses on the other hand. The last
fuel subsidy removal on 1st January, 2012 sparked an uprising that almost led to a revolution;
this attracted a lot of public debate, opinions and reactions leading to NLC strike and
demonstrations in various states. Therefore, the major focus of this study is to investigate
audience perception of federal government removal of fuel subsidy in Nigeria on January 2012.
1.2 Statement of the Research Problem.
Fuel is central to the economic pursuits of Nigerians, whose sustenance daily bread is tied to this
bye product of Nigeria‟s rich crude oil deposits. The Petroleum Product Pricing Regulatory
Agency (PPPRA) regulates the downstream Oil and Gas industry on behalf of the Federal
Government and by the removal of subsidy on Premium Motor Spirit (Petrol), the downstream
sub-sector of the Petroleum industry is deregulated for Petrol. Deregulation leaves market forces
as the sole determinant of product prices. While over the years, many Nigerians have opposed
the implementation of the policy in the Oil and Gas Industry, international finance and donor
agencies like the World Bank and IMF have been very harsh in their criticisms of the successive
governments that have sustained the policy for a single inherent flaw they condemned as harmful
to the growth of the Nigerian economy. However it should be noted that there were obvious

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flaws in the policy at inception and up to January 1, 2012 when it was removed there were more
private retailers of petroleum products than the state owned NNPC stations. The regulatory
framework (PPPRA) used to enforce the subsidy was weak, under resourced and suffered from
the Nigerian disease. The secrecy and lack of transparency by the administrator of the subsidy
(the NNPC) did not help matters either. Nigeria still could not make her refineries efficient. This
means that Nigeria could not produce enough refined products for local consumption. Finally,
due to the weak regulation by the PPPRA, some economic saboteurs/cabal were able to
misappropriate the fuel subsidy money and channel it to their own personal pockets instead of
using it for what it was intended for. These and more reasons triggered the federal government of
Nigeria to remove the subsidy on fuel. By this removal of oil subsidy, the question this study
seeks to answer is: What is the perception of the audience with regards to the removal of oil
subsidy in January 2012?
1.3 Objectives of the Study
The objectives of this study are:
1. To examine the audience perception of fuel subsidy removal
2. To examine the cause of the fuel subsidy removal
3. To ascertain the effects of fuel subsidy removal on the citizens of Nigeria.

1.4 Research Questions
The study will proffer answers to the following research questions:
1. What is your perception of the fuel subsidy removal?
2. What would you consider to be the cause of fuel subsidy removal?
3. What do you consider to be the effects of fuel subsidy removal on the citizens of Nigeria?
1.5 Research Hypothesis

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H1: There is significant relationship between oil subsidy removal and cost/standard of living of
the residents of Enugu metropolis.
1.6 Scope of the Study
This study investigates audience perceptions of the Federal Government removal of oil subsidy in
January 1, 2012 amongst residents of Enugu metropolis. It also investigated how the audience
perceived removal of oil subsidy. Decision was then made to conduct this study amongst
residents of Enugu metropolis because of proximity to the base of the researcher.
1.7 Significance of the Study
The uniqueness of this study is that it will be used to determine the opinions, beliefs, attitudes
and general behaviour of Nigerians on the Federal Government‟s removal of oil subsidy. Also,
the study will add to the numerous literatures written on the issue of the removal of fuel subsidy
by the government. It is also hoped that the findings of this study will help the government to be
more alive to their duties, as it should be under a democratic government. Also, this study is
significant politically because it will assist government in formulating formidable policies that
will bring a more robust relationship with the people as well as engender the needed conducive
environment for political and societal development. It will also help our future researchers to use
the study as a source of reference for future research academic and other purposes.
1.8 Definition of Terms
The following terms that formed the topic of this study are hereby defined conceptually and
operationally. The conceptual definitions are the dictionary meanings whereas the operational
definitions are their working meanings they include:

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Audience: This means those who are directly or indirectly affected by the removal of the fuel
subsidy.
Perception: The general opinion held by Enugu urban residents about the removal of fuel
subsidy by the federal government.
Fuel Subsidy removal: This means the withdrawer of the policy which made the price of fuel to
be reduced for the affordability of average Nigerians.

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