Fuel Subsidy Removal To Save Nigeria N19.2trn In Four Years

…Invest Savings In Refineries, Transport Infrastructure, Experts Tell FG

If the Federal Government’s plan to remove fuel subsidy is effectively implemented, then a total amount of N19.2trn will be saved under the administration of President Bola Tinubu in the next four years.

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The N19.2trn is arrived at based on the N400bn monthly payment on fuel subsidy by the Nigerian National Petroleum Company (NNPC) Limited.

The NNPC Group Chief Executive Officer (GCEO) Mr. Mele Kyari had during the inauguration of Dangote Refinery revealed that the monthly fuel subsidy burden is N400bn and has become unbearable.

Based on the NNPC disclosure, N4.8trn would be spent yearly, giving a total amount of N19.2trn in the next four years under the Tinubu-led administration.

Commenting on the removal, the Chief Executive Officer, of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf told THE WHISTLER that the fuel subsidy removal has enormous benefits for the country.

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Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE).
Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE)

Yusuf disclosed that the removal would unlock about N7trn into the federation account which would reduce fiscal deficit, and ultimately ease the burden of mounting debt in terms of revenue effect.

The CPPE Boss also explained that there would be a foreign exchange effect that would result from the import substitution as petroleum products importation progressively decline.

This, he noted, would conserve foreign exchange and boost Nigeria’s external reserves, adding that increase in investment would translate into more jobs in the downstream petroleum sector.

Yusuf said “The subsidy removal will enable more private investments in petroleum refineries, petrochemicals, and fertilizer plants. Post subsidy regime would also unlock investments in pipelines, storage facilities, transportation, and retail outlets.

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“Also, the export of refined petroleum products petrochemicals, and fertilizer as private capital will come into the space.

“There will also be a foreign exchange effect that would result from the import substitution as petroleum products importation progressively decline. This would conserve foreign exchange and boost our external reserves, increase in investment would translate into more jobs in the petroleum downstream sector.

“Smuggling of petroleum products across the borders will come to an end with a market pricing of refined products.”

According to Yusuf for subsidy removal to be sustainable, the private sector players must have access to foreign exchange to import, pending the commencement of domestic refining operations.

Also, he noted that palliatives must be made available and should be segmented into immediate, short-term and medium-term deliverables.

He said “Immediate and short-term options include wage review in public service, introduction of subsidized public transportation schemes across the country, and reduction in import duties on intermediate products for food-related production to moderate food inflation.

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“While in the medium to long-term, there should be accelerated efforts to upscale domestic refining capacity, which is driven by private investments; accelerated investments in rail transportation by the government to ease logistics of fuel distribution across the country as well as domestic freight costs.”

In his comments on the fuel subsidy removal, the Chairman of the Chartered Institute of Bankers of Nigeria, Abuja Chapter, Prof Uche Uwaleke revealed that the subsidy removal was a good decision due to its huge cost on the economy.

Uche-Uwaleke
Chairman of the Chartered Institute of Bankers of Nigeria, Abuja Chapter, Prof Uche Uweleke

Uwaleke who is also a former Imo State Finance Commissioner, told THE WHISTLER that the government would need to minimize the unseen negative impact which will be felt by many households as a result of an increase in the standard of living.

The University Don said “I support the removal of fuel subsidy due to its huge cost on the economy. However, in order to minimize the negative impact on livelihoods, issues of fuel subsidy and exchange rates unification which the president mentioned in the speech should be handled with care.

“To this end, I suggest an immediate constitution of an ‘Economic Policies Coordinating Committee’ made up of Economic and Finance experts, and Stakeholder engagement is required.”

Meanwhile, the Nigerian Labour Congress (NLC) has rejected the removal of the fuel subsidy announced by President Bola Tinubu on May 29.

NLC President Joe Ajaero
The President, Nigerian Labour Congress (NLC), Joe Ajaero

The NLC President, Joe Ajaero, in a statement issued on Wednesday said that within 24 hours after the president’s inauguration, the nation went into a “tailspin” due to a combination of service shutdowns and product price hikes.

Recall that THE WHISTLER had earlier reported that transportation prices were hiked by 100 per cent across states in Nigeria.

According to Ajaero, “We at the Nigeria Labour Congress are outraged by the pronouncement of President Bola Tinubu removing ‘fuel subsidy’ without due consultations with critical stakeholders or without putting in place palliative measures to cushion the harsh effects of the subsidy removal.

“Within hours of his pronouncement, the nation went into a tailspin due to a combination of service shutdowns and product price hikes, in some places representing over 300 per cent price adjustment.

“By his insensitive decision, President Tinubu on his inauguration day brought tears and sorrow to millions of Nigerians instead of hope.”

He lamented that the president has equally devalued the quality of citizens’ lives by over 300 per cent and counting, while noting that it is no heroism to commit against the people this level of cruelty at any time, let alone on an inauguration day.

The statement added, “On our part, we are staunchly opposed to this decision and are demanding an immediate withdrawal of this policy.

“If he is expecting a medal for taking this decision, he would certainly be disappointed to receive curses for the people of Nigeria consider this decision not only a slight but a big betrayal.”

Ajaero added that the implications of this decision are grave for our security and well-being.

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