Do you support removal of fuel subsidy by government?

The government has announced its intention to redirect the funds from the subsidy into infrastructure, support for small businesses and safety net programs. This is a step in the right direction. The government should assemble a committee of key civil society organizations to oversee the investment of these funds. Unlike the fuel subsidy itself, these programs should be targeted toward helping the poor including programs to reduce maternal and infant mortality and improve road quality and access. Most importantly, the programs must be tied to Nigeria’s overall development goals. It is too early to tell whether the Nigerian government will succeed in these efforts but after 20 years of dodging the issue and trillions of naira spent, the removal of the fuel subsidy should be supported. If implemented correctly, the subsidy funds could lead to major development gains. Moreover, the removal of the fuel subsidy – if successfully implemented would create the space for Nigeria to finally develop refinery capacity and consequently increase its potential revenue from the oil sector and create jobs.

Removing subsidy to the price in dollar equivalents will put more burdens on Nigerians and the economy. Poverty rate is very high and people need fuel for transportation and many small businesses. What is happening here is rather than the government accepting that it has failed greatly, it is looking for an escape route or quick fix for the major revenue issue. They need to find ways to process the crude in Nigeria where it costs less to process. A lot of people think it’s just the oil crude price, no there are processing costs and Nigeria imports processed crude. Not sure how many countries in the world produce crude, sell it and import it back processed. This makes no sense. I am not against removing the subsidy but I fault the timing. The economy is currently on shaky grounds with the effects of COVID-19. Countries around the world are looking for ways to stimulate economic activity and not put additional burden on the citizenry at this time.

It is the worst decision ever made by a government that prides itself as the government of the people. With this, the FG is sitting on a time bomb, with no respect to the feelings and suffering of the people. Subsidy if we must call a spade by its name is wasteful and clearly a misallocation of scarce resources. If at all there is going to be justification for any subsidy payment it must be limited only to production as it is judged to have the potential to boost capacity. But there is everything wrong with the way and manner we are now attempting to deregulate the pump price of petrol. It is difficult to properly conceptualize price deregulation under the current regime except we are content with what has been called price modulation. You cannot have a market whereby product importation is still under the monopoly of the state with the requirement for occasional announcements of depot prices and claim to have price deregulation. For any serious and definitive progress to be made in the desired direction, the state must hands-off importation which should be handed over to the major oil marketers. It is abnormal for the state to announce prices and then turn around disingenuously to claim that it has no hands any longer in the determination of pump price of products.

Removing fuel subsidy now is not a good timing because it has caused the increase of fuel price and this is happening in the middle of the global COVID-19 pandemic and a worsening economy could exacerbate the suffering of the people. I can tell you that for a lot of households their income has diminished and a lot of businesses have been shut down since March. I can tell you that today, Nigerians are facing hardship. The government must do everything possible to alleviate the suffering of the people.

This is not the right time to do such a thing. This is an era where we are entering recession and other parts of the world and citizens are being supported with palliatives but our government in Nigeria is increasing hardship. As much as the naira is depreciating against the dollar, the rise in the price of fuel shall continue. But the point is that Nigeria does not need to import fuel if President Buhari has taken action to put the refineries in order. More so, the government should not have removed the subsidy without first putting the refineries in order. The increase in the price of fuel is definitely going to have a spiral effect on the already bad economy with the attendant inflationary effect on the common masses.

Nigeria wasted numerous opportunities to put its refineries into use before COVID-19 depleted the world economy. Unfortunately, Nigeria did not take advantage of the high price of crude oil to put our own refineries to use. When we had the money, we did not do it. Now that the money has dwindled, I wonder how the government will do that. However, the best option is to secure the economy, make the refineries work and create jobs for Nigerians through that. We have a chance to deregulate now that prices have fallen globally. If we deregulate now and allow independent marketers to import, even if the price goes up again, there will be no need for subsidy.

It is a welcome idea, Nigerians need more focus on developing projects.l There is no way we can stop fuel smuggling across our borders with the current pricing system. The subsidy removal will bring more investment in the sector, the government will get more income for projects implementation, and in the long run, prosperity and progress will reign! Subsidy removal will at least have two major advantages, killing one major form of corruption and also encouraging investors to put their money in the sector. These at the end of the day, will witness more refineries built in Nigeria, provide job opportunities for our teeming unemployed youths, and would translate to a source of income for more projects development in transportation, healthcare, housing, and many more sectors.