The Fuel Subsidy Removal and the Performance of Transport Sector: A Study of Selected Transport Firms in Nigeria

Public policies such as the subsidy removal produce far reaching effects especially on citizens and transport business firms. The recent experience with subsidy removal in Nigeria left numerous wounds. This study investigated the fuel subsidy removal and the performance of transport sector, a study of selected transport firms. The data used for the analysis were primary data collected through the use of well-structured questionnaire administered on the management of the selected transport firms (Romchi Mass Transit Limited, Eastern Mass Transit Limited, Sunny Eru Motors, Udisam Motors, and Sunny bright Transit limited). The population of the study comprised staff (managers, cashiers, accountants, drivers and other staff) of the selected transport firms. The study adopted simple random sampling. The researchers utilized primary data sourced from structured questionnaire and employed percentage analysis and the Pearson Likelihood Ratio to analyze the data. The study found that the fuel subsidy removal brought significant costs, such as the high cost of transportation which affect the volume of passenger traffic of the transport firms; the study also found that the fuel subsidy removal significantly affected the cash flow performance of the transport firms due to reduce passenger traffic and patronage and inability to access fuel for business. Relying on the findings, the study concluded that the fuel subsidy removal had significant negative effect on the transport sector performance. The implication of the finding is that subsidy is a significant determinant of passenger traffic and consequently cash flow and financial performance of transport sector business. Based on the findings, the researchers recommended that: there is need for the government devise means of addressing the various identified challenges and difficulties occasioned by the subsidy removal implementation through mechanisms such as significant upward review of the minimum wage; this will help to mitigate the negative effect of the subsidy removal policy on the transport sector y way of improved passenger traffic and patronage, and the the government should reactivate the subsidy reinvestment programme and channel the subsidy savings to projects and programmes that will make meaningful impact on the transport sector