Subsidy removal is a tricky issue. It must be well managed to prevent problems for the country. The government must be cautious in handling the removal of fuel subsidy considering the harsh economic climate in Nigeria. The plan to hike the purchasing price of fuel next year will lead to the devaluation of the naira because this will lead to increase in the prices of goods and services and cause more hardship for citizens once it is implemented. Also, the promise of payment for the replacement of fuel subsidy with N5,000 to poor Nigerians will obviously be mismanaged, and is a perfect opportunity and excuse for rogues in government to become richer off the back of the poor masses, even as economic adversities bite harder.
Emmanuel Nosa, Lagos
I am in full support of the fuel subsidy removal. In my opinion, no right thinking individual, country or entity should support subsidizing fuel consumption in their country. The price keeps fluctuating and the so-called subsidy is enjoyed by few powerful people or persons in the country. The country keeps paying for subsidies on empty vessels berthed at our shores and a good quantity of the delivered products finding its way to neighbouring countries. The corruption on the so-called subsidy regime is just too much and no country can move forward with this. Well, the fuel price is expected to increase since the country wants to do away with fuel subsidy. However, N340 being the projected price is what I really don’t understand because the fuel price will surely be dictated by market forces i.e. the price of crude and refiner’s final price. The government can come in by trying to make sure some people or group of persons won’t use or seize that opportunity to make life more miserable for average Nigerians.
As regards the N5,000 stipends that will be paid to some 40% of the population, I think it is not visible and the government cannot sustain it. It is just not sustainable. We have seen so many government payments polices failed under this administration and this one won’t be an exemption.
The idea depicts a government that lacks innovations. With the current price regime, many Nigerians live below the poverty line. Is it the N5,000 stipend that will augment their woes when the pump price becomes N340? Secondly, a government running away from acclaimed payment of subsidy wants to joyfully incur N200billion expenditure every month. Does that make sense?
Finally, of what use will the N5,000 stipend be in the face of a premium motor spirit (PMS) induced inflation, which will ravage every fiber of the society? This is a no for me.
Subsidy removal may address key economic situations in the country, especially conservation of foreign exchange, increase in external reserves, boost for local refineries and related industries, as well as job creation. My main concern is the uncertainties surrounding the cash transfer initiative. How will the citizens who have collected the money or not be validated? Will the money be paid into the supposed poor Nigerians account, when most of them don’t have bank accounts? Is this another way of bribing voters because I guess this will be coming up ahead of the 2023 election because this was how many initiatives came up during the last election? It is really worrisome that we are doing away with subsidy by incurring a recurring annual net cost of N2.4 trillion if N5,000 is disbursed to 40 million ‘poor people’ monthly as proposed, not to mention the overhead cost that will be incurred in the administration of these funds.
The need to remove petrol subsidy remains the right way to go. The development would help local refining business in Nigeria as that would stimulate the economy and provide jobs. It would also reduce burden on foreign exchange, help boost foreign reserves, strengthen naira and help other industries to grow. On the increment of fuel price, I don’t believe this move will alleviate the suffering of Nigerians. The cost of fuel, food and services are already up while salaries remain the same. The mode of sharing the N5,000 will be a problem and almost all Nigerians require a subsidy. I wonder how these will play out in this country. I am particularly worried that citizens currently feel they receive nothing from the government and hopefully this increase does not alienate them further.
I doubt the ability of the government to follow through with this promise. This government has made so many promises that it has not been able to keep. I don’t have any faith in the government actually removing the fuel subsidy, even though that is what we have always asked for, let alone paying N5,000 to poor Nigerians as transport allowance. Also, the issue of increasing the fuel price is not the way forward at this point in time.
Economically, removing the fuel subsidy is the right thing to do. You can’t pay lower than what it costs to produce goods. Our problem is not the fuel subsidy, it is the corruption around the subsidy. Definitely, when subsidy is removed, there will be hike in fuel price. I feel before this can be done, the government should build up refinery before taking this step. The plan to give Nigerians N5,000 is a waste of money, which would not reduce the negative impact of fuel subsidy removal. How credible is the data the government would be using to distribute the allowance because our major challenge in this country is getting accurate data? We don’t have that. Before you know it, people will start putting the names of unknown persons and yet unborn, this will be a big problem I must say.
There is need for gradual phase-out of the fuel subsidy and not just declaring it all of a sudden. The removal will make all prices go up. There would be structural inflation because the economy depends on oil and the whole structure of the economy would be affected by the removal of the subsidy. What is the essence of the distribution of the N5,000 transport palliative to 40 million Nigerians, which would likely cost about N2.4 trillion in one year – an amount that is N600 billion short of the N3tn for fuel subsidy? N5,000 multiplied by 40 million is about N200 billion a month. It is N2.4 trillion in one year. This means that the government wants to save N3 trillion to spend N2.4 trillion. Now, who are the 40 million people? And how will the fund be disbursed?
An immediate implication of removing the subsidy would be the increase in transport and logistics which would translate to higher costs of goods and services, rising inflation, increased poverty from diminishing purchasing power, and a likely rise in the unemployment rate. When there is removal of subsidy. It is inevitable that the pump price of PMS will increase and this will affect everyone. There will be increase in the cost of transportation and the multiplier effect on other costs. Also, on the proposed N5,000 to be given to some people. I wonder how the selection would be made and from what database or register. What is the guarantee that the money will end up with the right people needing the intervention?
No, I don’t support the removal because that payment (of N5,000) will do nothing. That is if they’ll pay at all. Secondly, who exactly are the poor Nigerians? How will they get those facts? This government is not nice at all.
Nigeria refineries must work before fuel subsidy can be stopped. Any attempt to remove subsidy without working on our having our own refineries would cause serious issues. We should not be listening to international monetary bodies and others before we take our own decisions in Nigeria. Let’s do what we should do by creating more functional refineries. Increasing the cost of petrol without concluding the ongoing negotiations on the matter would create serious problem and it will affect a lot of Nigerians. I have a lot of concerns on how transparent the disbursement of the N5,000 grant will go due to how previous experiences with such schemes have played out. I am wondering if government is not trying to rob Nigerians to pay Nigerians. Why pay me N5,000 and then subject me to perpetual suffering? Clearly, government’s thought on the so-called removal of fuel subsidy is cloudy and appears to be a penny wise-pound foolish gamble. It is clear that the palliative offered by government will not solve the problems that will befall the masses that will suffer the double jeopardy of hyperinflation.
To trust the government, one has to trail their record and Nigeria government does not have a good track record. If they are saying they are going to increase the price of fuel to N340, how will that turn out? The question is, will all the poor citizens receive the N5,000? And if there is increment in the price of fuel, will this not affect the prices of goods and services? This is going to create more problems for everyone.
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