THE IMPACT OF OIL SUBSIDY REMOVAL ON NEWS GATHERING AND ECONOMY OF NEWS PRODUCTION IN NIGERIA
Abstract
This study examines the impact of oil subsidy removal on news gathering and the economy of news production in Nigeria. The research utilizes a Likert scale survey with 143 participants to assess the current state of news gathering in Nigeria, its dependency on subsidized fuel, and the potential impacts of subsidy removal. The study finds that subsidized fuel plays a significant role in reducing production costs and enabling resource allocation in the media industry. The removal of oil subsidies is perceived to have negative effects, including increased operating costs, reduced coverage areas, and job losses. The study concludes that proactive measures, such as exploring alternative energy sources and collaboration among stakeholders, are necessary to mitigate these impacts. Policymakers are recommended to consider the unique challenges faced by the media industry and implement supportive measures during the transition period. Overall, the study highlights the vulnerability of the Nigerian media industry to changes in energy policy and underscores the importance of adaptation and collaboration in ensuring its sustainability.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Oil subsidy removal has been a contentious issue in Nigeria for several years. The country, as a major oil producer, has long subsidized the cost of fuel to keep prices artificially low for consumers. However, this practice has had significant economic implications, including a strain on government finances and allegations of corruption in the subsidy system. In recent years, there have been calls for the removal of the subsidy to address these issues and promote economic sustainability.
Nigeria is blessed with vast quantities of oil and is the sixth largest oil exporter in OPEC. This has generated billions of dollars in revenues over the last fifty years since oil was found in Nigeria. However, as in most developing countries, this has not translated into an improved welfare condition for the people. Instead through inefficiencies, corruption, abuse of natural monopoly powers, mismanagement, smuggling, bureaucratic bottlenecks and excessive subsidizing, the supply of refined crude oil products in the country has virtually collapsed (Ibanga, 2011; Balouga, 2012)
For five decades now, Nigeria’s economic policies, growth, and other related activities have been largely influenced by the oil industry. To say that the economy is heavily dependent on the oil industry will amount to an understatement as the oil industry is nothing short of a Life – blood for the Nigerian economy (Adelabu, 2012).
Available evidence in extant literature shows that Nigeria is the largest in Africa and the sixth largest oil producing country in the world. The country’s economic strength is derived largely from its oil and gas wealth, which contribute 99 percent of government revenues and 38.8 per of GDP (2010, National budget). Despite these positive developments, successive Nigerian governments have been unable to use the oil wealth to significantly reduce poverty, provide basic social and economic services her citizens need (Ering & Akpan, 2012). Fuel subsidy was before the coming of the Jonathan administration, a policy of federal government meant to assist the people of Nigeria to cushion the effects of their economic hardship. Fuel subsidy removal which the Federal Government under President Goodluck Jonathan has canvassed and lobbied for since he was sworn in last May 29, appeared to have finally got to the blast off stage, Monday, December 12, 2011. That was when the national Economic Council (NEC), headed by vice President Namadi Sambo decided that government should finally remove the subsidy come January 2012 likewise the incumbent President President Muhammadu Buhari.
The term subsidy simply depict any measure that keeps prices consumers pay for a good or produce below market level for consumer or for producers. Subsidies take different forms, these include grants, tax reductions and exemptions or price controls. Others affect prices or cost indirectly such as regulations that skew the market price in favour of a particular fuel, government. Sponsored technology, or research and development. (R & O) Alozie (2009).
According to Eyiuche (2012) the federal government operated fuel subsidy with the aim of making petroleum products available to cushion the effect of actual market prices of the product on the general populace. The federal government during the military era was of the opinion that the cost of production, transportation of fuel will be so much a heavy burden for the poor masses of Nigerians to bear alone and therefore decided to pay part of the total amount of fuel cost for every Nigerian in order to make the product available and affordable. This is actually what is referred to as fuel subsidy, that is the government paying part of the total amount of fuel cost. His intention of cushioning the effect of actual market price of fuel product actually worked for a period of time, say from 1973-1983. On March 31st 1986. Gen. Ibrahim Babangida increased the pump price of petrol form 20k to #39.5k. This was about 97.5% increment.
Sources have it that issues worsened with the advent to democracy. On June 1st, 2000 Chief Olusegun Obasanjo increased the pump price of petrol from #20 to #30 (50% increment). Gradually, the aim of the military government that introduced fuel subsidy was subdued and defeated.
The benefits of fuel subsidy to the average Nigerian was short lived. The federal government claim to have spent over #1.4 trillion on fuel subsidy in the past five years. It also claimed to be paying heavily to subsidize kerosene which is imported into the country through the Nigerian National Petroleum corporation (NNPC), the fuel subsidy policy has also bred several unintended consequences and practices such as smuggling of petroleum products out of the country, the federal government also claimed that the fuel subsidy policy has made them unable to tackle problems of our collective infrastructure which are the roads, power, agriculture, fixing the refineries etc.Omoniji (2012).
Given the antecedents that most Nigerians have not benefited from fuel subsidy, several economists view subsidies as highly corrupt, wasteful and bled money from the treasury into the private pockets of rich fuel importers. As a result of this obvious reality, the federal government on January 1st 2012 dramatically announced the end of fuel subsidy. With the intention of using the money accrued from fuel subsidy to develop other sectors of the economy , and also to ensure sustainable develop and wealth generation for the nation. Onanuga (2012).
The removal of fuel subsidy by the nigeian government raises lot of dust. It can be said to be the most talked about issue since the inception of democracy in Nigeria. It can also be said that the subsidy will go down in history as one of the most unpopular policies ever imposed on Nigerians. The protest and war of words that the policy generated pointed out glaringly the mistrust Nigerians, most especially the youths have for the government due to years upon years of failed promises and unaccomplished government polcies/programmes. Nigerians got a shocking new year gift from the federal government on January 1st 2012. They found long queues at the filling stations where petrol was sold above #65 per litre. Fuel subsidy removal which the federal government under the leadership of President Goodluck Ebele Jonathan has canvassed and lobbied for since he was sworm in last May 29, 2011 appeared to have finally got to the blast off stage. It was on Monday, December 12, 2011, that the National Economic Council headed by the Vice President Nnmadi Sambo decided that government should finally remove the subsidy come January 2012. The body consists of the vice president, governors, strategic ministers and central bank of Nigeria (CBN) claimed that subsidy removal had become inevitable to avert the collapse of Nigerian economy. Daily sun (2012:18).
The withdrawal of fuel subsidy by the federal government generated heated debates by Nigerian Labour Congress (NLC) owing to its socio-economic implications on the nations economy. The prices of goods and services rose, the cost of transportation also rose drastically even commercial motorcycle instantly adjusted their fares as roon as the subsidy removal was announced. Many artisan like welders, aluminum window filters, tailors, who cannot afford power generators are today out of work, many Nigerian youths have taken to riding commercial motorcycle and tricycle while others went into street hawtony just to keep body and soul together. The NLC and government workers went on strike which resulted the nation (Nigeria) to loose chose to $617 million daily, translating into about #100 billion, this removal also brought about mass poverty to Nigerians as the prices of goods and services increased while their income still remain constant, and also violent demonstration which distorted peace and tranquility in the country. Following the pronouncement, motorist who were traveling back to their various destinations after the new year and Christmas celebrations were hit by sudden likes on petrol prices. Prices rose dramatically ranging between #140 and #150 per litre and at between #170 to #200 on the black market. Omoniji (2012: 4).
In the words of Kauffmann (2010: 128) subsidy removal as a programme enjoyed relative success with limited social stress, in others cases the exercise was deemed a failure. Elimination of subsidies on essential commodities like fuel has been known to precipitate social disolocation and in the extreme led to street riots and civil strike. Fuel subsidy removal programmes are sensitive to economy structure, level of development of the country, political system and the state of the economy. There is evidence that the more successful countries have taken a phase or gradual approach, have engage in conscientious research prior to implementation and followed a regorious approach to policy making. The effective communication and fair level of trust between citizens and government may be the other critical success factors in such an exercise. We examine Nigeria’s proposal for subsidy removal against this back drop.
1.2 Statement of the Problem
The removal of oil subsidies in Nigeria poses a multifaceted challenge, particularly in its impact on the media landscape. As a major oil producer, Nigeria has long subsidized fuel costs, ensuring affordable prices for consumers. However, the removal of these subsidies could lead to increased fuel prices, which in turn could affect the cost of news gathering and production. This poses a significant problem for the media industry, which relies heavily on fuel for transportation and power generation.
Furthermore, the removal of oil subsidies could have broader economic implications, potentially leading to inflation and reduced consumer purchasing power. This could result in a decrease in advertising revenue for media organizations, further exacerbating their financial challenges. Additionally, the removal of oil subsidies could lead to increased operational costs for media organizations, including transportation and equipment maintenance, further straining their already limited resources.
Moreover, the removal of oil subsidies could impact the ability of media organizations to provide comprehensive coverage of important issues, as they may be forced to prioritize certain stories over others due to limited resources. This could have a detrimental effect on the quality of journalism in Nigeria, potentially leading to a decrease in the diversity and depth of news coverage.
Overall, the removal of oil subsidies in Nigeria poses a significant challenge for the media industry, impacting its ability to gather and produce news. Addressing these challenges will require innovative solutions and a proactive approach from media organizations, policymakers, and other stakeholders.
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1.3 Objectives of the Study
- To examine the current state of news gathering in Nigeria.
- To analyze the economy of news production in Nigeria.
- To assess the potential impacts of oil subsidy removal on news gathering and the economy of news production in Nigeria.
1.4 Research Questions
- What is the current state of news gathering in Nigeria?
- How does the economy of news production in Nigeria operate?
- What are the potential impacts of oil subsidy removal on news gathering and the economy of news production in Nigeria?
1.5 Significance of the Study
Theoretical Significance
This study contributes to the theoretical understanding of the relationship between oil subsidy removal and the media industry, particularly in the Nigerian context. By examining the potential impacts of subsidy removal on news gathering and the economy of news production, this study fills a gap in the literature regarding the intersection of energy policy and media economics. The findings of this study will help to advance theories related to media economics, particularly in developing countries where energy subsidies are common.
Practical Significance
The practical significance of this study lies in its implications for media practitioners, policymakers, and other stakeholders. The findings of this study will provide valuable insights into the challenges facing the media industry in Nigeria in the context of oil subsidy removal. This, in turn, will inform the development of strategies and policies aimed at mitigating the negative impacts of subsidy removal on the media sector.
For media practitioners, this study will provide valuable insights into how they can adapt their practices to navigate the challenges posed by subsidy removal. This may include exploring alternative sources of energy, optimizing resource allocation, and enhancing collaboration with other stakeholders.
For policymakers, the findings of this study will provide evidence-based recommendations for the design and implementation of energy policies that take into account the needs and challenges of the media industry. This may include providing targeted support to media organizations affected by subsidy removal and promoting energy efficiency in the media sector.
1.6 Scope of the Study
This study will focus on the impact of oil subsidy removal on news gathering and the economy of news production in Nigeria. It will examine the current state of news gathering in the country, analyze the economy of news production, and assess the potential impacts of oil subsidy removal on these aspects of the media industry.
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