Incessant Hike in Transportation Costs and Transportation Fare: Investigating The Role of Subsidy Removal in Nigeria

Abstract

Fuel is a major force among many others persuading transport costs and transport fare in Nigeria. It
plays crucial role in the production of goods and services in all facets of the economy, that is why
some countries round world find it necessary to subsidize and ensured citizens have access to fuel
which is of national concern. Fuel in Nigeria is an inelastic product both at demand and supply sides,
which means that it is very difficult for consumers to find alternatives to the use of it in their daily
lives. Transport costs are monetary measure of what the transport provider must pay to produce
transportation services. Transport rates are the prices or fares of transport services paid by their users
to the transport service provider, meanwhile fuel subsidy also interferes in those factors affecting
transport costs and transport fares. Among other formula of attaining a diversified economy is the
diversification of transport system and sources of energy. For a third world country like Nigeria, fuel
subsidy is perceived as a major instrument to enhance citizens’ welfare most especially the middleand
low-income earning populace, concurrently, the expenditure of fuel subsidy must be properly
monitored to curb against corruption as shown in the previous administrations. Strict policies can be
set aside as deterrence (such as judicial murder, life imprisonment and other costly punishments) for
any corrupt political office holder. Before considering subsidy removal, the recommendations in the
research must have been fully achieved.