Fuel Subsidy Removal Unleashes Financial Strain: Tales from Lagos and Abuja Analysts NairametricsbyAnalysts Nairametrics 2 days ago Fuel shortages slowed Nigeria’s economy in Q1 2023 - report Amidst the bustling streets of Lagos, where life unfolds in a symphony of movement and activity, Uche Egwu stands as a witness to the upheaval caused by the removal of fuel subsidy.
As an accountant working for a first-generation bank on Lagos Island, Uche’s daily routine was once defined by the comfort of his car, ferrying him effortlessly to his workplace in the Ojodu Berger axis.
Egwu’s testimony to Nairametrics unveils a stark reality that befell him and many others in the wake of subsidy removal. In the bygone era, a mere N12,000 was sufficient to fuel his trusty Honda car for an entire week of traversing Lagos’ busy streets.
However, the tides shifted mercilessly. With subsidies gone, the same tank now demands a staggering N32,000 to keep the wheels turning.
Egwu’s revelation hits like a thunderclap a monthly expenditure of N128,000 on fuel, devouring more than half of his N250,000 salary.
The sheer absurdity of it all is not lost on him. “With a salary of N250,000 every month, that would amount to more than half of my salary going to just fueling my car every month. It doesn’t make sense,” he said.
Thankfully, amidst this tumultuous turn of events, Egwu discovered a saving grace in the form of Lagos’ Metropolitan Bus Rapid Transport (BRT) scheme.
This affordable lifeline shuttles him to and from the bustling Lagos business district, providing a glimmer of hope amidst the sea of financial strain.
Gbenga Olaleye, a resident of the vibrant Ojo Local Government Area, finds himself in a particularly unfortunate predicament.
Despite working on Lagos Island, he is denied the privilege of enjoying the services offered by the convenient Lagos Metropolitan Bus Rapid Transport (BRT) scheme.
Instead, his daily routine forces him to rely on his car solely for transporting his family to church on Sundays.
For the rest of the week, he becomes a reluctant passenger, hopping in and out of rickety Danfo buses that ply his chosen route.
The grim reality is especially pronounced for owners of sport utility vans (SUVs), vehicles notorious for their voracious appetite for fuel.
Designed with powerful V-6 and V-8 engines, these beasts of the road guzzle fuel at an alarming rate.
Take, for instance, the formidable Land Cruiser Prado, boasting a fuel tank capacity of 87 litres. In the current Lagos fuel market, where prices soar at N490 per litre, the mere act of refuelling such an SUV drains a typical user of a staggering N42,630 every week, or an eye-watering N170,520 each month.
The financial burden imposed by soaring fuel prices is nothing short of staggering. Consider a person earning N500,000 per month, who owns an SUV.
They may spend 34% of their income solely on fuel. Similarly, someone earning N250,000 and needing to spend N128,000 per week on fuel would allocate around 51% of their monthly income to this expense.
These figures underscore the immense strain faced by Nigerians as they grapple with exorbitant fuel costs, leaving little room for financial stability or progress. Urgent action is needed to alleviate this crisis and provide relief to individuals and the economy as a whole.
As we shift our focus to the vibrant city of Abuja, a new dimension emerges in the struggle against high fuel prices. Due to the exorbitant cost of accommodation in the nation’s capital, many civil servants and businesspeople have been compelled to settle on the outskirts of the city.
Areas such as Gwagwalada, Kuje, Lugbe, Suleja, Mararaba Madalla, Karu, and Gwarimpa have become their chosen abodes.
However, this choice comes with its own set of challenges, primarily the significant distances they must cover on a daily basis. To illustrate the magnitude of the issue, consider that the distance between Abuja and Zuba spans 12 kilometres, while Gwarimpa and Abuja stand 9 kilometres apart.
The journey from Abuja to Mararaba entails covering 28 kilometres, and the trek from Gwagwalada to Abuja extends a daunting 46 kilometres.
These substantial distances become even more daunting during rush hours when what should be a 30-minute journey can stretch into a gruelling 3-hour ordeal, particularly on the Abuja-Mararaba Road.
The resulting traffic congestion exacerbates the strain on commuters, compounding the time, effort, and fuel required to navigate these routes.
These considerable distances highlight the harsh reality faced by commuters who are forced to navigate long and often congested routes, burning through precious fuel and incurring additional costs.
The impact of the fuel price hike is felt acutely by these individuals, as they not only grapple with the burden of rising prices but also contend with the sheer physical demands of commuting significant distances on a regular basis.
In the face of these new circumstances, Paul Echedi, a civil servant who relies on his Peugeot car, expressed his inability to afford daily commuting.
He shared with Nairametrics, “I don’t have the means, and I see no reason why I should drive my car to and from work every day, even though I no longer go to work five days a week.”
His sister, Lydia, who is employed at a real estate firm, echoed similar sentiments, deeming the act of driving to and from work a luxury she can no longer afford.
She emphatically declared, “For now, I declare myself free from fuel and maintenance costs.”
Remarkably, five weeks have passed since the removal of the fuel subsidy, yet the federal government has not introduced any direct policies to alleviate the economic hardships Nigerians are currently grappling with.
As citizens adjust to the new normal, the absence of concrete measures to address their growing pains leaves them in a state of uncertainty and financial strain.
In response to the prevailing challenges, two state governments, Edo and Kwara, have taken proactive measures to mitigate the difficulties faced by civil servants.
They have implemented a reduction in work days to three times a week, aiming to alleviate the burdens on employees.
However, the federal government’s plan to borrow $800 million for the purpose of distributing it among 10 million homes of vulnerable Nigerians has faced criticism from economists.
These experts argue that such handouts will have limited impact on poverty alleviation, casting doubt on the effectiveness of this approach.
In the midst of this evolving landscape, a prominent figure within Nigeria’s auto industry, who wished to remain anonymous, shared valuable insights with Nairametrics.
They emphasized the importance for vehicle owners to be smart about their car usage during these challenging times. Managing fuel consumption becomes crucial not only to maintain affordability but also to minimize expenses in the face of rising costs.
He also suggested efficient route planning is a crucial factor in reducing fuel consumption. He said by utilizing navigation apps like Google Maps, vehicle owners can identify the shortest and most time-efficient routes, avoiding congested areas and traffic jams.
He said this not only saves time but also minimizes unnecessary mileage and ultimately conserves fuel.
“Aggressive driving habits such as rapid acceleration, harsh braking, and speeding, significantly increase fuel consumption. By adopting smooth driving techniques, such as maintaining a consistent speed and using gradual acceleration and deceleration, vehicle owners can improve fuel efficiency and reduce overall fuel consumption,” he said.
Additionally, Francis Akpojafo, a vehicle owner in Lagos, suggested participating in ride-sharing programs as an effective way to reduce fuel consumption and share commuting costs with others.
By pooling resources and sharing rides, vehicle owners can significantly decrease fuel consumption, contributing to a greener environment and saving money.
In the midst of the fuel crisis and escalating transportation costs, employees are taking matters into their own hands. Recognizing the financial strain caused by commuting, many are advocating for their organizations to adopt more work-from-home policies. Some are even willing to resign if their demands are not met.
Moreover, employees are pushing for higher salaries to cope with the mounting transportation expenses, putting additional pressure on companies.
However, companies find themselves caught in a quagmire. The prospect of raising salaries to match the increased expenses is a significant challenge. Many businesses have not experienced a corresponding rise in revenues, making it difficult to meet employee demands.
Moreover, with the purchasing power of consumers dwindling, companies are cautious about raising prices, fearing potential repercussions on sales.
This conundrum places both employees and organizations in a delicate situation. As the fuel crisis continues to impact individuals and businesses alike, finding a sustainable solution that balances the financial well-being of employees with the viability of companies becomes increasingly crucial https://nairametrics.com/2023/07/09/fuel-subsidy-removal-unleashes-financial-strain-tales-from-lagos-and-abuja/ |
