Movement is essential to life and in a country like Nigeria where individuals are largely responsible for their transportation, it is a given that transport cost takes a large chunk of the disposable income of an average Nigerian.
A recently published report by SBM, a Lagos-based research firm, showed that fuel price is not a major determinant of transport cost in Nigeria. “Over a five-year period, petrol prices increased by 12.1%, petrol subsidy by 890% and transport cost by 283%,” the report stated. SBM’s position is not isolated as World Bank’s Country Director Shubham Chaudhuri stated that Nigeria’s decision to postpone the full deregulation of the downstream sector of the industry by 18 months may cost the country over N4trn in subsidy payments in 2022, adding that these subsidy payments impose a massive and unsustainable fiscal burden on the country’s economy.
“In 2017, the NNPC said that it spent ₦144.53 billion in subsidising petrol, and by 2021, subsidy had gulped ₦1,428 trillion, a whooping 890% increase,” the report stated. “Although the price of petrol has only risen marginally in that period – whether taken by itself or in comparison to its cost elements – transportation costs across the country have not risen at the same pace. Instead, they have risen more significantly,” the report stated, adding that the lowest transport cost in 2021 was 2.4 times higher than the average cost in 2017.
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