Who benefit most from fuel subsidies? Evidence from Nigeria

The paper studies the benefit incidence of fuel subsidies in Nigeria household sector. Combining annual subsidy estimates with the households' expenditure data from the 2009/10 Harmonized Living Standard Survey, we investigate how the benefits from fuel subsidies are accrued to each income groups in Nigeria. The results show that while the kerosene subsidy is more evenly distributed across income groups, petrol subsidy is concentrated to high income groups. In aggregate, the top 20% households enjoy twice as much the benefit of fuel subsidies as the bottom 20% households. We also examine the concentration and progressivity of fuel subsidies using Gini coefficient measures and Lorenz concentration curves and find both fuel subsidies are more regressive than the per capita expenditure.