Saturday, November 27, 2021

Amidst Devaluation Of Naira, Experts Demand Total Removal Of Fuel Subsidy

…subsidy more dangerous than chronic cancer – Ogah

Oil rig
Oil rig

In the light of the recent devaluation of the naira, an oil industry expert, Mr. Chukwuemeka Ogah, has urged the Federal Government to consider the path of total removal of fuel subsidy to save Nigeria’s downstream sector.

Speaking to Science Nigeria in Abuja, the business mogul likened the subsidy regime to something far more dangerous and deadlier than chronic cancer which has eaten into the system of its patient while waiting for the patient (Nigeria) to die an untimely death.

Recall that the International Monetary Fund (IMF) recently advised the Nigerian government to fully remove fuel subsidy and move to a market-based pricing mechanism in early 2022 as stipulated in the 2021 Petroleum Industry Act (PIA), rather than use delay tactics on the issue of subsidy removal.

It is of note that the IMF, in its 2021 Article IV Mission statement released by the government, projected that Nigeria’s fiscal deficit would widen in 2021 to 6.3 per cent of gross domestic product (GDP), despite high oil prices.

A situation which is, indeed, a pointer to the Federal Government of Nigeria, indicating that the country is sitting on a timebomb waiting to explode without the timely removal of subsidy on petroleum products.

Although there has been an attempt to remove fuel subsidy in the past without result, as a result of resistance on the part of citizens in May 2016, a time when petrol pump prices were hiked by around 68 per cent from N87/litre to N145/litre and many assumed this signalled full deregulation. However, this failed due to a lack of political will to end the subsidy regime at a time when the exchange rate and landing cost of fuel tottered between N280 and N285/US$1.

According to Ogah, the current removal of fuel subsidy remained the surest was to ensure that the enemies of the country do not succeed in further impoverishing the country under the guise of fuel subsidy.

“Can you imagine that, currently, the fiscal deficit of Nigeria is projected at 3.93 per cent and 3.39 per cent of GDP in Nigeria’s 2021 and 2022 budgets, respectively; yet, our government is saying we should wait till 2022 before we can remove subsidy?

“This is even as the IMF said a complete removal of regressive fuel subsidy would go a long way in providing adequate compensatory measures for the poor, especially from the ongoing COVID-19 pandemic, weak security situation and spending pressures. A situation which can pose a great risk to the nation’s wealth,” he queried.

Ogah further alluded that there is no better time for President Muhammadu Buhari to put an end to fuel subsidy reign than now.

“It is high time the government removed let go by removing fuel subsidy totally and empower the private sector to create jobs and wealth in our country. This would help in the growth and development of our economy,” he said.

Alex Apeh
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