•Target N400/liter
•Provide palliatives for poor, vulnerable –Experts
By Chinwendu Obienyi
Yesterday’s remarks by President Ahmed Bola Tinubu’s at his inauguration that the Federal Government remains committed to removing fuel subsidy, has sent shockwaves down the spine of residents and motorists as fuel marketers promoptly locked customers out of their stations and refused to dispense products to them.
This was as long queues returned to filling stations across the country in response to the long awaited subsidy removal policy of the new administration with panic buying seen in some fuel stations across Lagos and Ogun and parts of the country.
Tinubu, on Monday, made a bold move to end the controversial fuel subsidy that has plagued the country for decades.
In his inaugural speech, he declared that “fuel subsidy is gone” and that there was no provision for it in the budget he inherited from his predecessor, Muhammadu Buhari.
“On fuel subsidy, unfortunately, the budget that existed before I assumed office and what I have heard is that no provision is there for fuel subsidy, so fuel subsidy is gone.
He also stated that his administration will be targeting a higher GDP growth, create jobs, work towards a unified exchange rate and ensure that investors and foreign businesses repatriate their hard earned dividends and profits home.
However, hours after making the subsidy pronouncement, Daily Sun investigations revealed that some fuel stations were seen hoarding fuel products in areas like Orile Iganmu, Ojo, Boundary as well as Ibafo. Further investigations revealed that residents at Ajah and Lekki Phase 1 were seen hurriedly buying enough fuel in the cars and kegs amid rumors of fuel hike in days to come.
The fuel subsidy was a policy that was aimed at keeping the price of petrol low for consumers by paying the difference between the market price and the regulated price to importers and marketers.
However, critics have argued that the subsidy was unsustainable, inefficient, and prone to corruption. According to data from the National Bureau of Statistics (NBS), Nigeria spent about N10 trillion on the import of fuel and lubricants in 2022.
Hence, Tinubu’s decision to scrap the fuel subsidy is in line with his campaign promise to reform the oil sector and diversify the economy. It also marks a significant shift in Nigeria’s political and economic landscape. However, It remains to be seen how he will implement his vision and how Nigerians will adapt to the new reality.
Reacting to the development, many experts have argued that removing the fuel subsidy would free up funds for other developmental projects and encourage private investment in the refining sector. However, they also warned that the government must provide adequate palliatives and social safety nets for the poor and vulnerable who would bear the brunt of the price hike.
In a programme monitored by Daily Sun at the weekend, The President, African Development Bank, Akinwumi Adesina, stated that fuel subsidies were killing the Nigerian economy, and costing the economy $10 billion in 2022.
“Nigeria is borrowing what it does not have to borrow for. It is simply to eliminate fuel subsidies and use the resources well for national development. Rather support should be provided for the private sector refineries and modular refineries to allow for efficiency and competitiveness to drive down fuel pump prices.
The newly commissioned Dangote Refinery will revolutionise Nigeria’s economy. However, there is an urgent need to look at the cost of governance. The cost of governance in Nigeria is way too high and should be drastically reduced to free up more resources for development”, Adesina said.
For his part, the Managing Director, APT Securities, Mallam Kurfi Garba, said Tinubu’s inaugural speech is expected to have a quick impact on the economy but might be met with difficulties by the Labour union as well as other stakeholders.
Garba said, “What I expected was this new government would remove it but again I would have said Tinubu should sit down with all stakeholders, discuss and agree if he wants to have a smooth, running transition, otherwise, he will be starting with hurdles which will bring down the government. He will have the labour to contend with and when the labour union decides to go on strike, how do we then move? Yes, there is a need to remove subsidies but you need to carry all the stakeholders along.
We have the potential to achieve 6 per cent GDP growth but all we need to do is identify those potentialities and look into it. For instance, in the year 2000, our communications sector contribution to GDP was less than 3 per cent. Today, the sector is contributing 18 per cent, a sixfold increase. Our current figure last year was 3 per cent and so if we want to double it, it is achievable. We just need to identify the hanging fruit and flog them”.
