Who Benefit Most from Fuel Subsidies? Evidence from Nigeria

Fossil Fuel Subsidies, Income Inequality, and Poverty: Evidence From Developing Countries

“…Another approach -albeit less common -to evaluate the extent of inequality associated with fossil fuel subsidies is to use rank-dependent measures. Soile and Mu (2015) assess the distribution of fuel subsidies relative to that of household expenditure in Nigeria by comparing their respective Gini coefficient measures and Lorenz concentration curves. Their results, based on data from the 2009-2010 Harmonized Living Standard Survey, suggest that the welfare associated with fuel subsidies was less equally distributed than the welfare measured by household expenditure, showing that subsidies exacerbated rather than reduced inequalities.…”

“…In particular, reformers must convince the population of their capacity to anticipate changes and to ensure that these changes will be fair and reasonable (Vagliasindi, 2012(Vagliasindi, , 2013Clements et al, 2013). In Nigeria, continuous resistance to attempts to remove fossil fuel subsidies has prevailed because most times, the government reneged on its promises on how the proceeds from the subsidy removal would be applied to improve the economy or raise the standard of living of the people (Soile and Mu, 2015). Similarly, taking the example of the reform of the gas subsidy implemented by the government of El Salvador in 2011, Calvo-Gonzalez et al (2015) show that this reform turned out to be highly unpopular, while it was expected to improve the welfare of around three-quarters of the population, because of the low level of information about the reform and doubts on the ability of the government to deliver compensations for losses incurred.…”

Distributional Impacts of Carbon Pricing: A Meta-Analysis

“…For example, the incidence and the distributional impacts of the repealed Australian carbon tax were subject to public and academic debate (Rahman 2013;Sajeewani et al 2015). The progressive Nigerian fuel and petrol subsidy reform in 2012 even resulted in mass protests and strikes which led to a partial reimplementation (Soile and Mu 2015;Lockwood 2015;Dorband et al 2017). 3 The literature on the distributional impacts of climate policies provides ambiguous results.…”

Illicit Schemes: Fossil fuel subsidy reforms and the role of tax evasion and smuggling

“…At about 3% of GDP in 2011 subsidies are a significant expense for the government, and fail to reach Nigerians in more than one sense (NEITI, 2013;IMF, 2013;Soile and Mu, 2015): As with all FFS schemes, the direct financial benefits to households are concentrated on the rich, thus failing to benefit the absolute poor (who constitute 61% of the population 4 ). In addition, a complex and opaque system of intermediary dealers and political influence means that, instead of lowering the market price, subsidies are often privately appropriated before the fuel reaches the market.…”