Evaluation of the Consequences and Implications of the Domestic Petrol Pump Price Increase in Nigeria by the Bola Tinubu Administration

Abstract

With the emergence of the Bola Tinubu administration on May 29, 2023 in Nigeria, one of the first policies embarked upon was the removal of fuel subsidy and subsequent increase of domestic pump price of petrol to an average of N600.00/liter. This has resulted in massive hue and cry on the social media, where some have alleged that the fuel subsidy is indeed a lie, while others have insinuated and alleged that the recent increase of the pump price of petrol is at the instance of the advice by World Bank and the International Monetary Fund (IMF). However, it is believed that Government exists to make policies for the common good of the people it governs and to manage the satisfaction of the Political, Economic and Social concerns of the economy. Since governance has to do with the people and their welfare, it requires a good leader who is capable of listening to the people in addition to being aided by capable institutions with expertise and capacity with well trained personnel. Is this the case in Nigeria? It is believed that extant policy advice to developing economies by International organizations are based on quantitative tools and paradigms that are either subjective or are partial in their analysis and therefore their prescriptions become counter-productive and self-defeating. This study is a bold attempt to use the total differential systems modeling approach (ecostatometrics) to analyze the true consequences and implications of the new policy of domestic petrol pump price increase on the Nigerian economy as a whole. The result is that the whole economy will be depressed given the two options considered. Output of all sectors will fall and all incomes and consumption will also fall. Inflation will be astronomical and the economy will not grow due to the policy and many Nigerians may die as a result. To ameliorate the situation, Government should embark on massive investments, build