PERTANIKA JOURNAL OF SOCIAL SCIENCES AND HUMANITIES

This paper draws from qualitative data to examine the opacity of Nigeria’s downstream oil sector within the ambit of its fuel subsidy policy. It specifically addresses whether the poor state of Nigeria’s refineries is linked to the prebendal benefits associated with the administration of fuel subsidies as well as the correlation between the opacity of Nigeria’s downstream oil sector and fuel subsidy. Furthermore, the paper interrogates how fuel importation could be considered a rational option to address domestic needs for refined petroleum products. The paper offers two major interrelated insights: First, it finds that fuel subsidy nurtures the propensity for sabotage, corruption, and money laundering; there tends to be a link between fuel subsidy and the non-functionality of Nigeria’s state-owned refineries, and second, the pro-poor justifications for sustaining fuel subsidy is a proxy for continued elite enrichment through the manipulation of the subsidy regime. Overall, the paper highlights the imperative of rethinking the fuel subsidy architecture by rebuilding Nigeria’s downstream oil sector, especially the domestic capacity for refining crude oil.

• Abuh, A., & Akubo, J. (2022, April 15). National assembly okays N4tr fuel subsidy payment for 2022. The Guardian. https://guardian.ng/news/national-assembly-okays-n4tr-fuel-subsidy-payment-for-2022/

• Adekunle, I. A., & Oseni, I. O. (2021). Fuel subsidies and carbon emission: Evidence from asymmetric modelling. Environmental Science and Pollution Research, 28(18), 22729–22741. https://doi.org/10.1007/s11356-021-12384-0

• Adenekan, S. (2022, January 21). Fuel subsidy: Why our refineries are not working. Premium Times. https://www.premiumtimesng.com/news/top-news/507015-fuel-subsidy-why-our-refineries-are-not-working-nlc-president.html

• Adeoti, J., Chete, L., Beaton, C., & Clarke, K. (2016). Compensation mechanisms for fuel subsidy removal in Nigeria. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/compensation-mechanisms-fuel-subsidy-removal-nigeria.pdf

• Adigun, A. (2023, May 29). Inauguration: 10 key points in Tinubu’s inaugural speech. Nigerian Tribune. https://tribuneonlineng.com/inauguration-10-key-points-in-tinubus-inaugural-speech/

• Aidt, T. S. (2016). Rent seeking and the economics of corruption. Constitutional Political Economy, 27(2), 142–157. https://doi.org/10.1007/s10602-016-9215-9

• Akanle, O., Adebayo, K., & Adetayo, O. (2014). Fuel subsidy in Nigeria: Contexts of governance and social protest. International Journal of Sociology and Social Policy, 34(1/2), 88–106. https://doi.org/10.1108/ijssp-01-2013-0002

• Akintayo, O. (2022, July 18). Marketers finally hike petrol price to N170-N190/litre. Punch. https://punchng.com/marketers-finally-hike-petrol-price-to-n170-n190-litre/

• Akor, C. (2017). From subalterns to independent actors? Youth, social media and the fuel subsidy protests of January 2012 in Nigeria. Africa Development, XLII(2), 107-127.

• Akpan, U. (2023, September 11). Oil price rises to $92.79 on output cut, may hit $107. Vanguard. https://www.vanguardngr.com/2023/09/oil-price-rises-to-92-79-on-output-cut-may-hit-107/

• Amos, I. (2022, April 29). NEITI report rubbishes FG’s N4trn fuel subsidy proposal for 2022. Sweet Crude Reports. https://sweetcrudereports.com/neiti-report-rubbishes-fgs-n4trn-fuel-subsidy-proposal-for-2022/

• Ani, D. P., Onoja, E. A., & Humbe, I. T. (2021). Partial fuel subsidy removal in Nigeria: Its effects on the economy and agricultural sector. International Journal of Social Ecology and Sustainable Development, 12(1), 98-114. http://doi.org/10.4018/IJSESD.2021010108

• Anyaogu, I. (2023, August 16). Nigeria lost N16.25trn to oil theft from 2009 to 2020 – NEITI. Business day. https://businessday.ng/energy/article/nigeria-lost-n16-25trn-to-oil-theft-from-2009-to-2020-neiti/#:~:text=The%20Nigeria%20Extractive%20Industries%20Transparency,crude%20oil%20within%20this%20period

• Atagboro, E. (2015). Due process mechanism and fraudulent practices in Nigerian public sector. Acta Universitatis Danubius. Administratio, 7(1), 22-29.

• Awojulugbe, O. (2021, April 14). Factsheet: What you need to know about Nigeria’s ailing refineries and their perennial repairs. Africa Check. https://africacheck.org/fact-checks/factsheets/factsheet-what-you-need-know-about-nigerias-ailing-refineries-and-their

• Azeez, W. (2022, June 15). Petrol subsidy: FG struggling to meet debt service obligations, says Zainab Ahmed. The Cable. https://www.thecable.ng/petrol-subsidy-fg-struggling-to-meet-debt-service-obligations-says-zainab-ahmed

• Bazilian, M., & Onyeji, I. (2012). Fossil fuel subsidy removal and inadequate public power supply: Implications for businesses. Energy Policy, 45, 1–5. https://doi.org/10.1016/j.enpol.2012.02.057

• Beattie, J. (2013, February 8). The shocking truth about fuel subsidy fraud. African Business. https://african.business/2013/02/energy-resources/the-shocking-truth-about-fuel-subsidy-fraud/

• Centre for Public Policy Alternatives. (2012). Nigeria: Fuel subsidy. http://toluogunlesi.files.wordpress.com/2012/01/fuel-subsidy-desktop-study-report-copy1.pdf

• Coady, D., El-Said, M., Gillingham, R., Kpodar, K., Medas, P., & Newhouse, D. (2006). The magnitude and distribution of fuel subsidies: Evidence from Bolivia, Ghana, Jordan, Mali and Sri Lanka. International Monetary Fund. https://www.imf.org/external/pubs/ft/wp/2006/wp06247.pdf

• Dairo, F. (2020, August 30). Nigeria’s three refineries processed zero crude but cost nation N10 billion in June. Premium Times. https://www.premiumtimesng.com/news/headlines/411594-nigerias-three-refineries-processed-zero-crude-but-cost-nation-n10-billion-in-june.html

• Dennis, A. (2016). Household welfare implications of fossil fuel subsidy reforms in developing countries. Energy Policy, 96, 597–606. https://doi.org/10.1016/j.enpol.2016.06.039

• Duru, E. J. C. (2005). Due process principle and dividends of democracy in Nigeria. American Journal of International Politics and Development Studies, 1(1), 167-176.

• Eboh, M. (2020, April 8). N1.5trn spent on fuel subsidy in 2019—FG. Vanguard. https://www.vanguardngr.com/2020/04/n1-5trn-spent-on-fuel-subsidy-in-2019-fg/

• Eboh, C. (2023, January 20). Nigeria’s NNPC spent $10 billion on fuel subsidy in 2022. Reuters. https://www.reuters.com/business/energy/nigerias-nnpc-spent-10-billion-fuel-subsidy-2022-2023-01-20/

• Ezeani, E. C. (2014). Removing oil subsidies in Nigeria: Between necessity and false economy. The Journal of World Energy Law & Business, 7(4), 364–389. https://doi.org/10.1093/jwelb/jwu018

• Evans, O., Nwaogwugwu, I., Vincent, O., Wale-Awe, O., Mesagan, E., & Ojapinwa, T. (2023). The socio-economics of the 2023 fuel subsidy removal in Nigeria. BizEcons Quarterly, 17, 12-32.

• Factbox: Nigeria’s $6.8 billion fuel subsidy scam. (2012, May 13). Reuters. https://www.reuters.com/article/us-nigeria-subsidy-graft-idUSBRE84C08N20120513

• Fazekas, M., & Tóth, I. J. (2016). From corruption to state capture: A new analytical framework with empirical applications from Hungary. Political Research Quarterly, 69(2), 320- 334. https://doi.org/10.1177/1065912916639137

• Federal Government of Nigeria. (1977). Price control decree 1977. https://gazettes.africa/archive/ng/1977/ng-government-gazette-supplement-dated-1977-01-13-no-2-part-a.pdf

• Gillies, A. (2009). Reforming corruption out of Nigerian oil? http://www.cmi.no/publications/file/3295-reforming-corruption-out-of-nigerian-oil-part-one.pdf

• Hennink, M., & Kaiser, B. N. (2022). Sample sizes for saturation in qualitative research: A systematic review of empirical tests. Social Science & Medicine, 292, Article 114523. https://doi.org/10.1016/j.socscimed.2021.114523.

• Houeland, C. (2017). Between the street and Aso Rock*: The role of Nigerian trade unions in popular protests. Journal of Contemporary African Studies, 36(1), 103–120. https://doi.org/10.1080/02589001.2017.1396297

• Houeland, C. (2020). Contentious and institutional politics in a petro-state: Nigeria’s 2012 fuel subsidy protests. The Extractive Industries and Society, 7(4), 1230–1237. https://doi.org/10.1016/j.exis.2020.05.010

• Houeland, C. (2022). The social contract and industrial citizenship: Nigerian trade unions’ role in the recurring fuel subsidy protests. Africa, 92(5), 860-879. https://doi.org/10.1017/S0001972022000523

• Ibietan, J., Abasilim, U. D., & Olobio, T. (2018). An evaluation of deregulation policy of the downstream petroleum sector and Nigeria’s economy. Pertanika Journal Social Sciences & Humanities, 26(3), 1843-1864.

• Lin, B., & Atsagli, P. (2017). Energy consumption, inter-fuel substitution and economic growth in Nigeria. Energy, 120, 675–685. https://doi.org/10.1016/j.energy.2016.11.115

• Lockwood, M. (2014). Fossil fuel subsidy reform, rent management and political fragmentation in developing countries. New Political Economy, 20(4), 475–494. https://doi.org/10.1080/13563467.2014.923826

• Jeremiah, K. (2022, December 15). Nigeria’s elite stole N16.25 trillion crude oil in 12 years, says NEITI. The Guardian. https://guardian.ng/news/nigerias-elite-stole-n16-25-trillion-crude-oil-in-12-years-says-neiti/

• Lugon-Moulin, A. (2010, March). Understanding state capture. Freedom from Fear Magazine, 38-39. https://f3magazine.unicri.it/wp-content/uploads/F3_06.pdf

• Mmadu, B. A., & Akan, D. C. (2013). Inefficient subsidy in Nigerian oil sector; Implications for revenue generation and household welfare in Nigeria. International Journal of Revenue Management, 7(1), 75. https://doi.org/10.1504/ijrm.2013.053360

• McCulloch, N., Moerenhout, T., & Yang, J. (2021). Fuel subsidy reform and the social contract in Nigeria: A micro-economic analysis. Energy Policy, 156, Article 112336. https://doi.org/10.1016/j.enpol.2021.112336

• Ministry of Petroleum Resources. (n.d). Report of the national refineries special task force. https://africaoilgasreport.com/wp-content/uploads/2015/05/National-Refineries-Special-Task-Force.pdf

• News Agency of Nigeria. (2021, March 24). Reps to audit funds spent on rehabilitation, repairs of refineries. The Guardian. https://guardian.ng/news/reps-to-audit-funds-spent-on-rehabilitation-repairs-of-refineries/

• Nigerian National Petroleum Corporation. (2020). 2020 annual statistical bulletin. https://search.worldcat.org/title/14163531

• NNPC spends $396.33m on four refineries in 10 years. (2018, May 8). The Nation. https://thenationonlineng.net/nnpc-spends-396-33m-on-four-refineries-in-10-years/

• Nwachukwu, M. U., & Chike, H. (2011). Fuel subsidy in Nigeria: Fact or fallacy. Energy, 36(5), 2796–2801. https://doi.org/10.1016/j.energy.2011.02.020

• Nwafor, M., Ogujiuba, K., & Asogwa, R. (2006). Does subsidy removal hurt the poor? Evidence from computable general equilibrium analysis. African Institute for Applied Economics. https://pdf.usaid.gov/pdf_docs/Pnadh630.pdf

• Nwozor, A. (2009). Echoes of divergence within: The politics and politicisation of Nigeria’s debt relief. Review of African Political Economy 36(119), 23-35. https://doi.org/10.1080/03056240902888444

• Nwozor, A. (2014). Analysis of the policy of due process and fuel subsidy scam in Nigeria, 2002-2014. ANSU Journal of Peace and Development Studies, 2(1), 1-23.

• Nwozor, A., & Afolabi, O. (2023). Keeping up appearance? Nigeria’s anti-corruption crusade and image dilemma in the global arena. Journal of Financial Crime, 30(3), 813-827. https://doi.org/10.1108/JFC-02-2022-0039

• Nwozor, A., Olanrewaju, J. S., Ake, M. B., Aleyomi, M. B., & Lawal, E. E. (2021). State capture and elective dictatorship in Nigeria’s democratic space: A critical analysis. African Renaissance, 18(1), 53–72. https://doi.org/10.31920/2516-5305/2021/18n1a3

• Nwozor, A., Olanrewaju, J., Oshewolo, S., & Ake, M. (2020). Is Nigeria really fighting to win the anti-corruption war? Presidential body language, “string-puppetting” and selective prosecutions. Journal of Financial Crime, 27(2), 601-617. https://doi.org/10.1108/JFC-08-2019-0109

• Nwozor, A., & Oshewolo, S. (2020). Nigeria’s border closure drama: The critical questions. The Round Table: The Commonwealth Journal of International Affairs, 109(1), 90-91. https://doi.org/10.1080/00358533.2020.1715106

• Nwozor, A., Oshewolo, S., & Ogundele, O. (2019). Energy poverty and environmental sustainability in Nigeria: An exploratory assessment, IOP Conference Series: Earth and Environmental Science, 331, Article 012033. https://doi.org/10.1088/1755-1315/331/1/012033

• Oghifo, B. (2019, October 12). About $582bn stolen from Nigeria since 1960, says Chatham House. This Day. https://www.thisdaylive.com/index.php/2019/10/12/about-582bn-stolen-from-nigeria-since-1960-says-chatham-house/

• Okon, D. (2023, August 15). Tinubu considering “temporary subsidy” on petrol as landing cost rises. The Cable. https://www.thecable.ng/exclusive-tinubu-considering-temporary-subsidy-on-petrol-as-landing-cost-rises

• Oladipo, O. (2021, January 15). Explainer: What makes up the petroleum pricing template? Business Day. https://businessday.ng/energy/oilandgas/article/explainer-what-makes-up-the-petroleum-pricing-template/

• Olujobi, O. J. (2021). Deregulation of the downstream petroleum industry: An overview of the legal quandaries and proposal for improvement in Nigeria. Heliyon, 7, e06848. https://doi.org/10.1016/j.heliyon.2021.e06848

• Olujobi, O. J. (2023). Nigeria’s upstream petroleum industry anti-corruption legal framework: The necessity for overhauling and enrichment, Journal of Money Laundering Control, 26(7), 1-27. https://doi.org/10.1108/JMLC-10-2020-0119.

• Omotosho, B. S. (2019). Oil price shocks, fuel subsidies and macroeconomic (in)stability in Nigeria. CBN Journal of Applied Statistics, 10(2), 1-38.

• Onyeiwu, S. (2021, November 4). Fuel subsidies in Nigeria: They’re bad for the economy, but the lifeblood of politicians. The Conversation. https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966

• Organization of the Petroleum Exporting Countries. (2023). OPEC annual statistical bulletin. Vienna: Organization of the petroleum exporting countries. https://factual.afp.com/sites/default/files/medias/factchecking/asb_2023.pdf

• Osunmuyiwa, O., & Kalfagianni, A. (2017). The oil climax: Can Nigeria’s fuel subsidy reforms propel energy transitions? Energy Research & Social Science, 27, 96–105. https://doi.org/10.1016/j.erss.2017.03.003

• Petroleum products pricing template-Explanatory note. (2012). Proshare. https://www.proshare.co/articles/petroleum-products-pricing-template-explanatory-note?menu=Economy&classification=Read&category=Oil%20%26%20Gas

• Rentschler, J. (2016). Incidence and impact: The regional variation of poverty effects due to fossil fuel subsidy reform. Energy Policy, 96, 491–503. https://doi.org/10.1016/j.enpol.2016.06.025

• Sayne, A., Gillies, A., & Katsouris, C. (2015). Inside NNPC oil sales: A case for reform in Nigeria. https://resourcegovernance.org/sites/default/files/NRGI_InsideNNPCOilSales_CompleteReport.pdf

• Siddig, K., Aguiar, A., Grethe, H., Minor, P., & Walmsley, T. (2014). Impacts of removing fuel import subsidies in Nigeria on poverty. Energy Policy, 69, 165–178. https://doi.org/10.1016/j.enpol.2014.02.006

• Soile, I., & Mu, X. (2015). Who benefit most from fuel subsidies? Evidence from Nigeria. Energy Policy, 87, 314–324. https://doi.org/10.1016/j.enpol.2015.09.018

• Statista Research Department. (2023, August 2023). Weekly oil prices in Brent, OPEC basket, and WTI futures 2020-2023. Statista. https://www.statista.com/statistics/326017/weekly-crude-oil-prices/

• Stebbins, S. (2019, May 22). These 15 countries, as home to largest reserves, control the world’s oil. USA Today. https://www.usatoday.com/story/money/2019/05/22/largest-oil-reserves-in-world-15-countries-that-control-the-worlds-oil/39497945/

• Tollison, R. D. (2012). The economic theory of rent seeking, Public Choice, 152(1/2), 73-82. https://doi.org/10.1007/s11127-011-9852-5

• Udo, B. (2018, April 17). It’s official: Nigeria has no authentic data on petrol consumption. Premium Times. https://www.premiumtimesng.com/news/headlines/265266-its-official-nigeria-has-no-authentic-data-on-petrol-consumption.html

• Udo, B. (2020, June 17). Three refineries lost N1.6 trillion in 5 years, says NNPC audit report. Premium Times. https://www.premiumtimesng.com/business/business-news/398151-three-refineries-lost-n1-6trillion-in-5-years-says-nnpc-audit-report.html?tztc=1

• Uwalaka, T., & Watkins, J. (2018). Social media as the fifth estate in Nigeria: An analysis of the 2012 occupy Nigeria protest. African Journalism Studies, 39(4), 22-41. https://doi.org/10.1080/23743670.2018.1473274

• World Bank. (1997). Helping countries combat corruption: The role of the World Bank. http://www1.worldbank.org/publicsector/anticorrupt/corruptn/corrptn.pdf

• World Bank. (2022). The continuing urgency of business unusual: Nigeria development update. https://documents1.worldbank.org/curated/en/099740006132214750/pdf/P17782005822360a00a0850f63928a34418.pdf