Assessment of the effects of fuel subsidy removal on direct cost components of building in Abuja, Nigeria

Abstract

This study critically assesses the effects of fuel subsidy removal on the direct cost components of building projects in Abuja, Nigeria, with specific focus on materials (cement, reinforcement steel, and aggregates), labour, and plant costs between 2020 and 2025. A quantitative research design was adopted using market survey data analyzed through Pearson correlation and linear regression techniques using Jamovi software. Hypothesis testing was conducted to determine the significance of the relationship between fuel price fluctuations and direct construction cost components. The results indicate a very strong positive and statistically significant relationship between fuel prices and direct cost components of building, leading to the rejection of the null hypothesis. Cement prices increased by 45.8%, reinforcement steel by 44.4%, and aggregates by 32% in the post-subsidy removal period. Significant increases were also observed in mason and helper wages, rising by 25% and 37.5%, respectively. Furthermore, hypothesis testing confirmed a significant relationship between fuel price increases and plant operating costs, as higher fuel prices substantially increased equipment running expenses. Overall, the findings validate that fuel price deregulation exerts a cost-push inflationary effect on direct construction inputs, thereby increasing building production costs in Abuja. The study highlights the need for strategic policy interventions to mitigate energy-induced cost shocks within the housing sector in Nigeria