Fuel Subsidy Removal in Nigeria and Cross-Border Smuggling

Abstract

We explore the impact of fuel subsidy removal on cross-border fuel smuggling in Nigeria. Using trucking data for premium motor spirit movement across the country and the linear mixed-effects model to test for mean differences, the results confirm a significant reduction in fuel consumption, especially by border States after subsidy removal, suggesting cross-border smuggling. The results imply that removing the fuel subsidy was the right policy decision.