The assessed wastes and costs to the economy, associated with the 13-year old fuel subsidy regime operated by the Federal Government have irked economic analysts, who now renew calls for its end.
The situation, described as detrimental to socio-economic developments, has seen the country spend no less than N10 trillion on petrol import subsidy between 2006 and 2018. The N10 trillion consumed by the subsidy regime is sufficient to construct 27,000MW of electricity or build about 2,400 units of 1000-bed standard hospitals across 774 local government areas of Nigeria, found our research.
BudgIT, is a civic organisation that applies technology to intersect citizen engagement with institutional improvement, to facilitate societal change, described the development as ugly, saying that “Nigeria is dancing on the edge of a razor blade by continuing the subsidy regime.”
The Group’s research, titled: “Nigeria’s Petrol Subsidy Regime: Dilemma of the World’s Most Populous Black Nation” noted that Nigeria currently imports an average of 91 per cent of its daily petrol needs, thus disproportionately exposing local petrol prices to price shocks from international factors of production and exchange rate volatility. BudgIT’s Principal Lead, Gabriel Okeowo, said it’s high time fuel subsidy was removed for efficient palliative measures for those that would be hit by the removal.
He called on President Muhammadu Buhari to do the needful, particularly in transportation, power, health and education sectors to cushion any effect, using cheaper mass transit and subsidies to public institutions.
An economist, Ayodele Akinwunmi, said government presently, pays subsidy not only on the price of petrol products, but also on the exchange rate used for its importation. “My rough estimate shows that the subsidy for last year is in the region of N1trillion. The money should have been used to develop public schools so that the children of the poor can have access to quality education in public schools.
“As you are aware, education reduces inequality and has the capacity to move people out of poverty. So, government should invest it in healthcare in public hospitals. They can also invest in mass transportation system. These are areas that will have immediate impact on people’s welfare,” he said.
The Group’s Communications Associate, Shakir Akorede, explained that there is a near perfectly inverse relationship between the fall in the value of Naira and the rise in the cost of imported petrol, that is, when next the Naira is devalued, Nigeria’s subsidy bill can be expected to jump. According to him, fuel subsidy deprives Nigeria of funds needed for critical socio-economic development as it discourages investors, who generally prefer a deregulated industry, from investing in the downstream sector, especially in the area of refinery construction and operation.
He alleged that the continuation of petrol price regulation perpetuates safety nests for exceptional forms of corruption within the country’s subsidy regime. The Guardian
