Effective Fuel Subsidy Damages Environment
Absence of effective institutional arrangement, according to a co-authored study, ensures insignificant negative impact of fuel subsidy on the Nigerian environment
Petroleum, otherwise known as the premium motor spirit, has proved very crucial to the daily survival of most Nigerians, such that successive governments in the country has over the decades introduced various regimes of fuel subsidy to cushion the effect of rise in international oil price on the welfare of the people.
Though there are claims that fuel subsidy, which is not peculiar to Nigeria, asides having some negative effects on the economy, also frustrates efforts at tackling climate change. But Professor Philip Alege and Messrs. Opeyemi Akinyemi, Oluseyi Ajayi and Adeyemi Ogundipe, all of Covenant University, including Lloyd Amaghionyeodiwe of York College, City University of New York, in their study, ‘Fuel Subsidy Reform and Environmental Quality in Nigeria’, examine the existence of a relationship between fuel subsidy and environmental quality in Nigeria and possibly the direction of causality.
The study, published in the International Journal of Energy Economics and Policy, discovered that subsidy payment does not significantly influence environment, unless in a strong and effective institutional framework which ensure that subsided contents are not diverted and its benefits actually trickled down to those intended.