Project – FUEL SUBSIDY REMOVAL AND COST OF THE LIVING ON STUDENTS
CHAPTER ONE
INTRODUCTION
- BACKGROUND OF THE STUDY
Research on Fuel subsidy removal and cost of the living on students has been on interest to the country, Nigerians. This research evidence will show Fuel subsidy removal and cost of the living on students. The removal of fuel subsidies has been a topic of significant debate, particularly in developing countries where such subsidies are often seen as a means to make energy more affordable for the general population. According to a study by Coady et al. (2015), fuel subsidies can distort market prices, leading to inefficiencies and overconsumption of fossil fuels. However, their removal can lead to an immediate increase in fuel prices, which can have a cascading effect on the cost of living. For students, this can be particularly challenging as they often operate on limited budgets. The increased cost of transportation, for instance, can make commuting to educational institutions more expensive, thereby straining their financial resources. Additionally, the rise in fuel prices can lead to higher costs for goods and services, including food and housing, which are essential for students’ daily lives.
The impact of fuel subsidy removal on students’ cost of living is further compounded by the indirect effects on the broader economy. As noted by Gupta et al. (2000), the removal of subsidies can lead to inflationary pressures, which can erode the purchasing power of students and their families. This can result in a higher cost of educational materials and other necessities, making it more difficult for students to afford their education.
Moreover, the psychological stress associated with financial strain can adversely affect students’ academic performance and overall well-being. In some cases, students may be forced to take on part-time jobs to cover their increased expenses, which can detract from their study time and academic focus. Therefore, while the removal of fuel subsidies may be economically justified in the long term, its immediate impact on students’ cost of living is a critical issue that warrants careful consideration and targeted policy interventions.
Petroleum is the mainstay of the Nigerian economy. It plays a very crucial role in shaping and modifying the economic, political and social destiny of the country.
Governments frequently employ subsidies to boost economic activity in a variety of fields, including education. Eliminating subsidies, however, has the potential to significantly alter the educational landscape, including access, quality, and price. By surveying previous research on the topic, this literature review hopes to assess the educational consequences of eliminating subsidies.
For marginalized communities, financial aid plays a key role in making higher education more accessible. For instance, subsidies can assist bring the price of schooling down to a level that’s more manageable for families on a tight budget. However, people who are already at a disadvantage may have their access to education diminished if subsidies are eliminated. This is due to the fact that if tuition keeps rising, some families may be unable to afford it, resulting in a drop in student enrolment.
Education quality may also be affected by subsidies. Subsidies can be used to upgrade infrastructure, such school buildings and supplies. In addition to enhancing learning outcomes, subsidies can be utilized to recruit and retain highly skilled educators. However, particularly in low-income communities, the elimination of subsidies might result in a decline in educational quality. This is because schools may lack the funds necessary to properly maintain and upgrade their facilities and teaching methods.
Education costs can be affected by subsidies as well. Subsidies, for instance, might lessen the financial burden of things like school fees and textbooks. Subsidies can also help families with lower incomes by covering some of the costs of a child’s education. A rise in tuition costs is especially problematic for low-income families if subsidies are no longer available. This may cause fewer students to enroll and more students to drop out.
In sum, the loss of subsidies can have serious consequences for the educational system, especially in terms of access, quality, and cost. The elimination of subsidies may have varying effects on schools depending on a number of variables, such as the extent to which they are supported by the government, the accessibility of alternative financing sources, and the prevailing economic and social conditions. That’s why it’s crucial to weigh the pros and cons of eliminating subsidies before making any changes to the educational system.
According to Ogundipe (2013), Fuel Subsidy can be said to be the financial aid granted to autonomous and foremost oil marketers by the government for them to supply their products as a cheaper rate for the good of the masses. This move is almost always aimed at boosting the economy of a country, providing social amenities for the people, stabilizing the market, creation of employment opportunities and of course the new theory of it is capable of fighting corruption as postulated by the Nigerian government. The issue of subsidy is not alien to the nation’s down-stream because it existed during the military regime when the four refineries of the nation could only produce little which could not even satisfy the domestic needs of the people. Then, a need arose for the importation of finished petroleum products such as diesel, petrol and kerosene to meet the domestic need of Nigerians. For this reason, the influential Nigerians and those in the corridor of power considered the sudden wealth that will result from this opportunity and started acquiring the various wells in the country and finally, they overtook the petroleum industries. This undoubtedly was the birth of the child of fuel problems Nigerians are nurturing today especially as it affects petroleum.
On the first day of January, 2012 Nigerians woke up to face one of the greatest shock of their lives when the removal of fuel subsidy was announced by the federal government at a time perceived wrong, in a way many saw as erroneous, in a situation several believed was unstable and with arguments many opined came with a sinister motive. This raised the price of a litre of petrol from N65 to N141. A drive through the memory lane revealed that subsidy was once removed on kerosene and diesel by the then Federal government of Nigeria on reasons similar to one gave by the Pstudent Jona led administration and with promises that such policy will have a long lasting positive effects on all areas in the nation. However, nothing tangible could be said to be the celebrated outcome of the said policy.
It was argued by the then federal government that the removal of subsidy on diesel and kerosene would make the products available and affordable but it turned out to be fallacious fabrications, the products have become more scarce and expensive, instead of the promise of its expensive, instead of the promise of its availability. Saddening enough, none of the crippled refineries was brought back to its feet from the money realized from the removal of subsidy on diesel and kerosene. One begins to wonder if the time honored saying ‘once bitten twice shy’ was not the rhythm in the minds of long-suffering Nigerians when the Petroleum Products Pricing and Regulatory Agency (PPRA) announced the infamous policy on the 1st of January, 2012.
After weeklong protests by Nigerians, which was led by the Nigerian Labour Congress (NLC), Trade Union Congress (TUC), and some civil society groups, government bowed to public pressure not to remove the fuel subsidy entirely in view of some negative effects it would unleash on the populace, especially where there was absence of palliative and coupled with the fact that the government took the people by surprise.
The government after much hesitation, made a U-turn in her policy, partially removed the subsidy and reduced petrol price from N141 to N97 per litre. Although, it was not a return to status quo, Nigerians had wanted but they heaped much of their hope on government planned palliative to cushion the negative effects the partial removal of the fuel subsidy would have on the masses. Unfortunately, most of the promised palliative such as massive job creation, easy transportation and other goodies did not get out of government’s drawing board.
Early 2014, the same government was again touting with the idea of removing what remained of the subsidy, which the people thought is the only benefits they derive from the nation’s naturally endowed petrol – dollar largesse. The government argued that a tiny percentage of Nigerians called the cabal are the ones hugely profiting from the subsidy largesse and that the current low price of oil will always encourage smuggling of the product along our numerous porous borders. Government also said that the total fuel subsidy removal will attract more investment in the downstream oil sector which will boost employment and the economy.
Although, the government arguments may sound convincing, Nigerians have a pathetic tale and manifold frustrations to express over many years of government’s fuel price hike based on terrible regimes and the failure by the government to deliver on its promises.
- STATEMENT OF THE PROBLEM
Fuel subsidy removal and cost of the living on students can be significant. When fuel subsidies are removed, the cost of fuel increases, which in turn affects transportation costs. This can have a direct impact on education as students and teachers may have to spend more on transportation to get to school. Additionally, schools may also have to spend more on transportation for field trips or other educational activities.
Furthermore, the increased cost of fuel can also lead to higher prices for goods and services, including textbooks, school supplies, and school meals. This can put a strain on families and make it more difficult for them to afford education-related expenses.
Moreover, the removal of fuel subsidies can also have indirect effects on education. For example, if the cost of fuel increases, it can lead to higher inflation rates, which can affect the overall economy. This can result in reduced government spending on education, leading to budget cuts and a decrease in the quality of education provided.
It is important to note that Fuel subsidy removal and cost of the living on students can vary depending on the specific context and country. Different countries have different education systems and levels of government support for education. Additionally, the extent to which fuel subsidies are removed and the overall economic conditions of the country can also influence the impact on education.
1.3. OBJECTIVE OF THE STUDY
This study aims at assessing Effect of fuel subsidy removal on the performance of students in university of Maiduguri. The purpose of the study is summarized as follows:
- To find out whether fuel subsidy removal has any effect on the private cost of education
- To find out the relationship between fuel subsidy removal and increase in student’s transportation cost
- To find out the relationship between fuel subsidy removal and increase in student’s house rent (cost of living)
- RESEARCH HYPOTHESES
Hypotheses 1
Ho: There is no significant relationship between fuel subsidy removal and increase in Education cost.
Hi: There is a significant relationship between fuel subsidy removal and increase in Education cost.
Hypotheses 2
Ho: There is no significant effect of fuel subsidy removal on the increase of student’s transportation cost.
Hi: There is a significant effect of fuel subsidy removal on the increase in student’s transportation cost.
1.5 SIGNIFICANCE OF THE STUDY
1.6 SCOPE AND LIMITATION OF THE STUDY
This study is primary concerned with Fuel subsidy removal and cost of the living on students. This study/project work covers University of Maiduguri, Borno State. The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
1.7 DEFINITION OF TERMS
COST OF LIVING: The cost of living refers to the amount of money needed to cover basic expenses such as housing, food, taxes, healthcare, and other necessities.
SUBSIDY: Money that is paid by government of an organization to reduce the cost of services or of producing goods so that their prices can be kept low.
EDUCATION: Education is the transmission of knowledge, skills, and character traits. There are many debates about its precise definition, for example, about which aims it tries to achieve. A further issue is whether part of the meaning of education is that the change in the student is an improvement.
PALLIATIVE: An action that is designed to make a difficult situation seem better without actually solving the cause of the problems
REFINERY: a factory where a substance such as oil is refined
LARGESSE: An act of being generous with money
GROSS DOMESTIC PRODUCT (GDP): The total value of all the goods and services produced by a countryin a year.
CABAL: A small group of people who are involved in secret plans to get political power.
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study
Project – FUEL SUBSIDY REMOVAL AND COST OF THE LIVING ON STUDENTS