THE SOCIOECONOMIC IMPLICATION OF FUEL SCARCITY IN GWAGWALADA UNDER PRESIDENT AHMED TINUBU ADMINISTRATION

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

It is widely known that Nigeria possesses a significant quantity of natural resources. Regrettably, the copious abundance of wealth has not been converted into prosperity for its residents. It seems paradoxical that Nigeria, the most populous black nation and Africa's largest economy, is a wealthy country with impoverished residents. Nigeria possesses the second largest confirmed oil reserve in Africa, amounting to 37.2 billion barrels. This places it behind Libya in terms of oil reserves. Furthermore, Nigeria holds the distinction of being the largest oil producer on the continent. In March 2020, Nigeria's daily oil production reached approximately 1.78 million barrels. 

Although Nigeria possesses immense natural resources and extensive fertile land, its economy is mostly reliant on crude oil exports as the main source of government revenue and budgetary expenditure, making it a monolithic economy (Umeji, 2019). Nigeria's foreign exchange profits are mostly derived from the sale of crude oil, accounting for over 90% of the total. Additionally, crude oil sales contribute to about 60% of Nigeria's revenue and approximately 8% of its gross domestic product (GDP) (Olisah, 2020). In addition, petroleum plays a crucial role in all aspects of the Nigerian economy, and its significance cannot be underestimated. 

The Nigerian economy heavily relies on petroleum motor spirit (PMS) for both the transportation of products and service provision (Okechukwu, Ogbu, & Divine, 2019). According to Agu, Ekwutosi, and Augustine (2018), petroleum motor spirit plays a crucial role as an energy source in Nigeria, and the country's economy heavily relies on it to fuel economic activity. According to Okechukwu, Ogbu and Divine (2019), petroleum motor spirit may or may not be directly involved in the manufacturing of commodities, but it is utilised in their distribution process, hence contributing to the overall production cost. Therefore, Nigeria has a strong demand for energy fuel. Regrettably, despite having four refineries under government ownership, each capable of producing 445,000 barrels per day, which is more than sufficient to meet its domestic needs, Nigeria remains a net importer of refined petroleum products (Akin & Damilola, 2022). This makes Nigeria the sole member of the Organisation of Petroleum Exporting Countries (OPEC) that still relies on imported refined fuel (Adekoya, 2020). 

Despite the substantial revenue generated from oil exports, successive Nigerian governments have been unsuccessful in providing essential social services and reducing poverty. As a result, fuel subsidies were introduced in the mid-1980s to alleviate the hardships faced by the population due to the high cost of fuel. Subsidy refers to the situation where the government assists customers of a specific product by reducing the price below the current market rate for that commodity (Kadiri & Lawal, 2016; Agu, Ekwutosi & Augustine, 2018). 

Jump ahead to the year 2023, As President, Bola Ahmed Tinubu made the decision to eliminate the gasoline subsidy, which had been in place for decades and had been responsible for keeping the price of petroleum products low. As reported by BBC in 2023, shortly after Mr. Tinubu's initial speech, a large number of individuals swiftly took to the streets, either in vehicles or on foot, carrying yellow jerrycans, in order to obtain what they believed to be the final remaining supplies of petrol being sold at a price set by the government. However, only a small number of people were fortunate. Numerous fuel stations completely ceased their sales, while others independently raised their rates by almost 200%, resulting in widespread disorder and an artificially created shortage. This scarcity persists up to the present time as at the moment of doing this research. 

The persistent gasoline shortage throughout President Tinubu's government has significantly affected the quality of life for Nigerians, particularly the residents of Gwagwalada. Multiple filling stations in Gwagwalada are experiencing extensive car waits because of the surge in pump prices and the occurrence of racketeering. Moreover, the limited availability of fuel has resulted in a significant increase in the cost of living for the residents of Gwagwalada. Additionally, it has made it nearly impractical for them to transport their goods for trading purposes. Moreover, the oppressive lack of resources has resulted in several preventable incidents, both on the highways and within households, resulting in catastrophic outcomes as drivers stockpile additional fuel in their vehicles and keep it in their houses. Therefore, the necessity for this investigation arises. 

1.2 Statement of the Problem

The primary cause of the present fuel shortage in Nigeria was the government's choice to eliminate fuel subsidies, a longtime policy aimed at ensuring fuel affordability for the majority of Nigerians (Jamiu, 2023). Although subsidies have provided advantages for consumers, they have also exerted pressure on government resources and fostered the occurrence of wastefulness, smuggling, and inefficiency. The decision made by President Bola Ahmed Tinubu to remove money was intended to reallocate them to more economically productive areas. However, this action resulted in an unexpected and significant surge in fuel prices and shortages, catching many off guard and without any preparations in place. 

Nigeria's economy is highly dependent on oil exports and is confronted with notable obstacles, including the instability of oil prices in the international market and internal concerns such as shortages in foreign exchange (Olumide, 2023). The COVID-19 pandemic and worldwide economic constraints have worsened these shortages, making it challenging for importers to obtain the necessary funds in dollars to import petroleum. The devaluation of the local currency has exacerbated these issues, resulting in a higher cost of imported petroleum (Arinze, 2023). The rise in fuel prices has exacerbated its shortage, resulting in negative consequences for the citizens of Gwagwalada and Nigeria as a whole. 

Furthermore, Arinze (2023) argues that Nigeria, although being a prominent oil producer, relies on imports for a substantial amount of its refined petroleum products since its refineries are not working adequately. The country's primary refineries frequently have shutdowns or operate at reduced capacity due to mismanagement, inadequate maintenance, and deteriorating infrastructure. The economy's dependence on imported fuel not only makes it susceptible to variations in global oil prices but also exposes it to vulnerabilities in logistics and supply chains. 

The fuel shortage in Gwagwalada has resulted in higher transportation expenses, which in turn has had a direct impact on the prices of goods and services across all sectors. This exacerbates inflation, which just reached a 16-year peak, with the transport industry seeing significant negative impacts (Kafayat, 2024). Small and medium firms, which are especially vulnerable to changes in gasoline prices, experience the most negative impact, resulting in job cuts and a decrease in economic activity. 

The persistent fuel scarcity in Nigeria is a complex problem that necessitates synchronised efforts on economic, political, and social fronts (Saliu et al., 2023). The elimination of fuel subsidies has played a role in the present crisis, but it is also crucial to tackle the fundamental problems of corruption, inefficiency, and infrastructure deterioration (Ikenna, 2023). The government's capacity to enact efficient reforms and effectively handle public expectations will be pivotal in successfully navigating through this crisis and guaranteeing a steady fuel supply in the future. This study will analyse the socioeconomic impact of fuel scarcity in Gwagwalada under President Bola Ahmed Tinubu's term. 

1.3 Objectives of the study

The primary objective of this study is to critically examine the socioeconomic implication of fuel subsidy in Gwagwalada under President Bola Ahmed Tinubu administration. Specific objectives of this study are to:

Determine the extent of fuel scarcity on the residents of Gwagwalada under President Tinubu administration.

Examine the factors that influences fuel scarcity under President Tinubu administration.

Find out the effects of fuel scarcity on the residents of Gwagwalada under President Tinubu administration.

Assess the challenges associated with fuel scarcity in Gwagwalada under President Tinubu administration.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What is the extent of fuel scarcity on the residents of Gwagwalada under President Tinubu administration?

What are the factors that influences fuel scarcity under President Tinubu administration?

What are the effects of fuel scarcity on the residents of Gwagwalada under President Tinubu administration?

What are the challenges associated with fuel scarcity in Gwagwalada under President Tinubu administration?

1.5 Research Hypotheses

The following research hypothesis will be validated in this study::

Ho1: the effects of fuel scarcity on the residents of Gwagwalada under President Tinubu administration is low

1.6 Scope of the study

Broadly, this study focuses to critically examine the socioeconomic implication of fuel subsidy in Gwagwalada under President Bola Ahmed Tinubu administration. Specifically, this study focuses on determining the extent of fuel scarcity on the residents of Gwagwalada under President Tinubu administration, and examining the factors that influences fuel scarcity under President Tinubu administration.

Further, this study will find out the effects of fuel scarcity on the residents of Gwagwalada under President Tinubu administration, and Find out the effects of fuel scarcity on the residents of Gwagwalada under President Tinubu administration and assess the challenges associated with fuel scarcity in Gwagwalada under President Tinubu administration.

This study will be carried out in Gwagwalada, Abuja.

1.7 Significance of the study

This study will serve as a baseline for researchers and students and also guide government, policy makers and Nigerians. 

This study will also be of great importance to the youths, government and the nation as a whole as it will discuss the relevance of fuel and its impact to standard living.

Finally, this study will also serve as a reference material to students and researchers for further studies and future research.

1.8 Limitations of the study

As is customary in all human undertakings, the researchers encountered modest constraints during the investigation. A major limitation of the study is the researcher's financial constraint, as they are a full-time student without any means of income to sustain themselves.

Another limitation was the lack of extensive literature on the subject, as there is limited data available on the socioeconomic implication of fuel subsidy in Gwagwalada under President Bola Ahmed Tinubu administration. Consequently, a significant amount of time and effort was necessary to locate the appropriate resources, books, or information, as well as to gather data. Also, this study is constrained by its small sample size and narrow geographic scope, as it just focuses on Gwagwalada, Abuja. Consequently, the results of this study are not applicable for generalization, thereby leaving room for other research.

Furthermore, the researcher faced a time constraint due to the need to do this research while also fulfilling obligations such as attending lectures and other educational activities.

1.9 Definition of terms

Implication: implication refers to the conclusion that can be drawn from something although it is not explicitly stated

Socioeconomics:  socioeconomic refers to the interaction between the social and economic habits of a group of people

Fuel scarcity: Fuel scarcity implies that the demand and use of fuel are high than the actual supply or potential quantity of resources.