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Evaluating The Implications of Fuel Subsidy Removal On Nigeria's Transportation Industry: Challenges and Opportunities
Subject area: Physical Sciences and Environment · Area of research: Transportation
Abstract
This study investigates the impact of fuel subsidy removal on Nigeria?s transportation industry, focusing on the economic implications for revenue generation, transport costs, and policy direction. Utilizing secondary data from the NNPC and National Bureau of Statistics, a conceptual econometric model was developed to examine the relationship between fuel prices, consumption, intra- and inter-city transport costs, and gross domestic product (GDP) derived from the transportation sector. Multiple regression analysis was conducted using Ordinary Least Squares (OLS) methods via EViews 12. The findings reveal a moderate positive relationship between intra-city transport costs and GDP, while fuel price increases are associated with reduced revenue in the transport sector. Although the model explains 54.41% of the variation in GDP, the overall statistical significance is limited. The study underscores the need for phased subsidy removal, strategic investment in intra-city transport infrastructure, and enhanced fuel efficiency measures. These insights are crucial for policymakers aiming to balance economic sustainability with social equity in Nigeria?s evolving energy and transport landscape.
Keywords
Fuel subsidy removal, Transportation economics, Nigeria, Fuel price, GDP, Policy reform
How to cite this paper
@article{1709597,
author = {Ahmed Oyeyemi, Adebakin Osoja, Opeyemi Fadipe, Olasunkanmi O. Olasokan},
title = {Evaluating The Implications of Fuel Subsidy Removal On Nigeria's Transportation Industry: Challenges and Opportunities},
journal = {Iconic Research And Engineering Journals},
year = {2025},
volume = {9},
number = {1},
pages = {574-589},
issn = {2456-8880},
url = {https://www.irejournals.com/formatedpaper/1709597.pdf},
abstract = {This study investigates the impact of fuel subsidy removal on Nigeria?s transportation industry, focusing on the economic implications for revenue generation, transport costs, and policy direction. Utilizing secondary data from the NNPC and National Bureau of Statistics, a conceptual econometric model was developed to examine the relationship between fuel prices, consumption, intra- and inter-city transport costs, and gross domestic product (GDP) derived from the transportation sector. Multiple regression analysis was conducted using Ordinary Least Squares (OLS) methods via EViews 12. The findings reveal a moderate positive relationship between intra-city transport costs and GDP, while fuel price increases are associated with reduced revenue in the transport sector. Although the model explains 54.41% of the variation in GDP, the overall statistical significance is limited. The study underscores the need for phased subsidy removal, strategic investment in intra-city transport infrastructure, and enhanced fuel efficiency measures. These insights are crucial for policymakers aiming to balance economic sustainability with social equity in Nigeria?s evolving energy and transport landscape.},
keywords = {Fuel subsidy removal, Transportation economics, Nigeria, Fuel price, GDP, Policy reform},
month = {July},
}