High Cost of Petrol: Nigerians Not Enjoying Full Benefits of Petrol Subsidy

Abuja, Nigeria. May 19th, 2015 – A poll commissioned by BusinessDay Media and conducted by NOIPolls in January 2015 revealed that slightly more than half (52 percent) of the respondents surveyed believe that Nigerians have not enjoyed the full benefit of petrol subsidy. This perception may be guided by the fact that a larger proportion of Nigerians purchase petrol at a price above the subsidized rate of ₦97.[1] More findings revealed that ‘corruption’ is perceived to be the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy as reported by the majority of respondents (66 percent) and this cuts across gender and geo-political zone. Given this set back, a significant proportion (42 percent) of Nigerians (especially from the South-East zone) would support the full removal of the fuel subsidy to a great extent. On the other hand, a slightly larger proportion (44 percent) would not support the full removal of petrol subsidy by the government; this stance was mainly maintained by residents from the North-East and North-West regions.

An evaluation of the awareness and perception of Nigerians on the drop in global crude oil prices revealed that majority (71 percent) of Nigerians who buy petrol are aware of the drop in the price of crude oil by 50% worldwide.  As a result of this drop, almost all the respondents (94 percent) who purchase petrol believe there should be a corresponding drop in the price of petrol in Nigeria to reflect the drop in the price of crude oil worldwide. In line with this, the price of petrol dropped by ₦10 bringing the official price of petrol  to ₦87 per litre as announced by the Government in January 2015. In spite of this, the majority of Nigerians suggest petrol price should drop to a price ranging from ₦50 - ₦70 (an average of ₦59), to correspond with the drop in the price of crude oil worldwide. These are the key findings from the  Consumer Perception on Petrol Price and Susidy poll conducted in January 2015.

Brief Background

After the announcement of the partial removal of fuel subsidy by the Federal Government of Nigeria on 1st of January 2012, Nigerian filling stations were mandated to sell petrol to consumers at the official price of ₦97. While this price reflects partial subsidy, surveys conducted by NOIPolls from 2013 to 2014 to monitor the price of petrol revealed that a high proportion of Nigerians purchase petrol above the official price,[2] thus questioning the benefit of the fuel subsidy to Nigerians.

However, following the recent drop in the price of crude oil in the global market from an averaged $62 in December 2014 to an averaged $50 per barrel in the first half of January 2015, the Federal Government, through the Petroleum Products Pricing Regulatory Agency (PPPRA), announced a reduction in the pump price of petrol to ₦87 from the previous ₦97. This was said to have been possible after the PPPRA made a consistent and diligent monitoring of the trend, since the beginning of the drop in crude oil price. In line with this a number of Nigerians, through the media have argued that the price of crude oil reduction in the global market has reduced by 50% and as such the pump price of petrol in Nigeria should reduce in the same ratio.

Against this background, NOIPolls Ltd on behalf of BusinessDay conducted a poll to seek the perceptions of Nigerians regarding petrol price and subsidy, the drop in crude oil price and its effect on the overall price of petrol.

Survey Findings

Respondents to the poll were asked seven specific questions and this section of the report presents findings from each question.

The questionnaire was administered to only petrol customers thus respondents were asked if they buy petrol. Those who do not buy petrol had their interview terminated at this point, while respondents who purchase petrol continued the interview.

To gauge the perceptions of respondents on whether Nigerians have benefited from petrol subsidy, respondents were asked: In your opinion, do you think Nigerians have enjoyed the full benefit of petrol subsidy? Findings revealed that slightly more than half (52 percent) of respondents surveyed believe Nigerians have not enjoyed the full benefit of the petrol subsidy; this perception was highest among respondents whose ages range from 22-60 years. This perception may be guided by the fact that several Nigerians purchase petrol at a price above the subsidized rate of ₦87 as previously established by NOIPolls.[3]

In addition, 48 percent indicated that Nigerians have enjoyed the full benefit of the petrol subsidy, especially by the North-East residents, as well as respondents within the age groups of 18-22 years and 61+.

Respondents who believe Nigerians have not enjoyed the full benefits of petrol subsidy (52 percent of the total) were further asked: What factors do you think have hindered Nigerians from enjoying the full benefits of petrol subsidy? The findings revealed that ‘corruption’ is the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy as reported by the majority (66 percent) of respondents and this cuts across gender and geo-political zone. ‘Poor management of fuel subsidy’ (39 percent), ‘inefficient regulatory authorities’ (18 percent), ‘differences in cost of fuel importation’ (12 percent) and ‘inefficiencies of petrol price control mechanism’ (12 percent) amongst others are some of the factors Nigerians think have hindered the enjoyment of the full benefits of petrol subsidy.

To ascertain the stance of Nigerians regarding the full removal of petrol subsidy by the government, respondents were asked: To what extent would you support the full removal of petrol subsidy by the government? The outcome shows that the slight majority (44 percent) of respondents surveyed would not support the total removal of petrol subsidy by the government, whereas 42 percent indicated that they would support the total removal of petrol subsidy by the government to a great extent. In addition, 14 percent of the respondents would support the removal of fuel subsidy to some extent.

Analysis by geo-political zone reveals that the South-East zone has the highest percentage of respondents who would support the petrol subsidy removal to a great extent. The South-West zone accounted for the largest proportion of respondents who would support the total removal of the fuel subsidy to some extent while, the North-West zone has the larger share of respondents who would not support full subsidy removal by the government.

To gauge the awareness of Nigerians on the recent drop in the price of crude oil worldwide, respondents were asked: Are you aware of the recent drop in the price of crude oil by 50% worldwide?  Findings revealed that the majority of Nigerians (71 percent) who buy petrol are aware of the recent drop in the price of crude oil by 50 percent worldwide while 29 percent were unaware of this change.

Further analysis on age-group shows that respondents aged 18 – 21 years (75 percent) were most unaware of the drop in the price of crude oil, moreover awareness generally increased with an increase in age with respondents aged 61 years and above (81 percent) being the most aware.

Subsequently, respondents were asked: In your opinion, do you think that the drop in crude oil should be reflected in petrol price in Nigeria? The outcome reveals that almost all (94 percent) the respondent who purchase petrol believe there should be a corresponding drop in the price of petrol in Nigeria to reflect the drop in the price of crude oil worldwide. This cuts across gender, region and age-group.

On the contrary, 6 percent of Nigerians stated that the drop in the price of crude oil worldwide should have no effect in the price of petrol in Nigeria; respondents in this category were mostly aged between 18-21 years.

Finally respondents were asked: In your opinion, how much should the price of petrol drop to as a result of the drop in the price of crude oil by 50% worldwide? Findings revealed that majority (51 percent) of the respondents suggest that the price of petrol should drop to a range of ₦51- ₦70 as a result of the 50% drop in the price of crude oil; this is followed by 33 percent who indicated ₦30 - ₦50.  

However, when averaged out, Nigerians suggest the price of petrol should drop to ₦59 to correspond with the current drop in the price of crude oil. In addition while residents of the South-West maintained an average price of ₦57 being the lowest among other regions, the South-South zone residents maintained an averge price of ₦63 being the highest.

In conclusion, findings from the revealed that slightly more than half (52 percent) of Nigerians who purchase petrol believe Nigerians have not enjoyed the full benefit of the petrol subsidy and  ‘corruption’ (66 percent) has been identified as the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy among other factors. More findings revealed that the slight majority (44 percent) of respondents surveyed would not support the total removal of petrol subsidy by the government, whereas 42 percent indicated that would support the full removal of petrol subsidy by the government to a great extent. Furthermore, an assessment of the drop in the price of crude oil by 50% revealed that almost all (94%) the respondent who purchase petrol believe there should be a corresponding drop in the price of petrol in Nigeria to reflect the drop in the price of crude oil worldwide. To this effect, the larger proportion of the respondents (51 percent) suggested that the price of petrol should drop to a range of ₦51 - ₦70 as a result of the 50% drop in the price of crude oil.

Survey Methods

The opinion poll was conducted in January 2015. It involved telephone interviews of a random nationwide sample. 1,500 randomly selected phone-owning Nigerians aged 18 years and above, representing the six geopolitical zones in the country, were interviewed. With a sample of this size, we can say with 95% confidence that the results obtained are statistically precise - within a range of plus or minus 3%.

About NOIPolls

NOIPolls Limited, No1 for country specific polling services in West Africa, works in technical partnership with the Gallup Organisation (USA). We conduct periodic opinion polls and studies on various socio-economic and political issues in Nigeria. More information is available at www.noi-polls.com

About BusinessDay Media

BusinessDay, established in 2001, is a daily business newspaper based in Lagos, Nigeria. It is the only Nigerian newspaper with a bureau in Accra, Ghana. BusinessDay Media Ltd is the leading medium for up-to-date news and insightful analysis of business, policy and the economy in Nigeria, a critical decision-making tool for investors and managers. It provides unbiased news and informed analysis on politics, governance, social and economic trends.

Disclaimer

This press release has been produced by NOIPolls Limited and authorized for release by BusinessDay Media on the NOIPolls media platform to provide information on all issues which form the subject matter of the document.

Kindly note that while we are willing to share results from our polls with the general public, we only request that NOIPolls be acknowledged as author whenever and wherever our poll results are used, cited or published.

NOIPolls hereby certifies that all the views expressed in this document accurately reflect its views of respondents surveyed for the poll, and background information is based on information from various sources that it believes are reliable; however, no representation is made that it is accurate or complete. Whilst reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors or fact or for any views expressed herein by NOIPolls for actions taken as a result of information provided in this report. Any ratings, forecasts, estimates, opinions or views herein constitute a judgment as at the date of this document. If the date of this document is not current, the views and content may not reflect NOIPolls’ current findings and/or thinking.

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[1] http://www.noi-polls.com/index.php?s_id=3&p_id=231&p_pt=1#.VMuez2h4pF4

[2] http://www.noi-polls.com/index.php?s_id=3&p_id=231&p_pt=1#.VMuez2h4pF4

[3] http://www.noi-polls.com/root/index.php?pid=229&ptid=1&parentid=13