Skip to main content

Fuel subsidy should be removed – Agbaje

Fuel subsidy

A renowned economist and Chief Executive Officer, RTC Advisory Services Limited, Mr. Opeyemi Agbaje, says the time is ripe for the Federal Government to remove fuel subsidy, which he described as wasteful and prone to corruption.
He said fuel subsidy removal would release N1tn per annum for investment in people, alleviating poverty, unemployment and inequality, adding that “the timing is auspicious due to low oil prices.”
Agbaje, who stated this at an investors’ forum in Lagos, said, “The economy is paying the cost of deregulated fuel (most people have bought fuel at N110 and above in the last three months) without getting the benefits of deregulation.

“Fuel subsidy is a middle class; consumption subsidy that is wasteful and prone to corruption. Nigeria needs to invest in the poor rather than middle class,” he said.
He said the country spent N2.19tn on fuel subsidy in 2011; N1.049.6tn in 2012; N971.1bn in 2013 and N971.1bn last year.
He said, “Spending 25 per cent of federal budget on importation of petrol, while Nigeria has huge crude oil and gas reserves does not make economic sense.
“The subsidy prevents the creation of a domestic refining and petrochemical sector through private investment (private investors and their potential financiers cannot invest in a sector where prices are regulated and subject to political veto).”
According to Agbaje, those who want subsidies to stay believe that the removal of fuel subsidies will lead to higher food and transportation costs and raise inflation, and may lead to political instability.
He, however, said, “The inflationary effect of oil subsidy removal is a one-off economic adjustment, which is vastly outweighed by the benefits.”
He argued that the risk of political instability could be easily managed by a careful communication campaign, adding that many Nigerians were now ready to accept higher oil prices in return for elimination of cycles of instability and scarcity.
Agbaje noted that given Nigeria’s rich crude oil and gas deposits, the country should be an exporter of refined petroleum and petrochemical products, rather than just crude.
“The sole factor preventing investment in domestic refineries is the oil subsidy. Full industry deregulation will produce a huge domestic, private sector, refining and petrochemical sector.
“This will increase the value of our exports and create jobs locally rather than subsidise foreign jobs,”
Post a Comment

Popular posts from this blog

FG and labor leaders to meet today over planned strike action against increased pump price

The Federal government, leaders of the Nigeria Labor Congress NLC ‎and Trade Union allies will be meeting today May 16th to discuss on the planned strike action by the Labor congress. The labor leaders on Saturday May 14th gave FG till midnight of Tuesday May 17th to revert to the old pup price of petrol of N86.50 or face a total strike that may begin on Wednesday May 18th.

The Federal government and Labor leaders' meeting will hold at the office of the Secretary to the Government of the Federation in Abuja by 10am..

Those expected at the meeting include Minister of Labor Chris Ngige, leaders of NLC, TUC, Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, and their Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN counterpart.

Badoo Srine Discovered,Alaka Abayomi Of Alaka Petroleum Apprehended(Video)

The Nigerian police SARS, IRT and RRS, has arrested a popular independent oil marketer of Alaka petroleum Alhaji Abayomi Alaka . Following investigations of the recent killing of a family of five over the weekend , kudos to the gallant men of the Nigerian police

CHECK NEW OSHODI OUT,LAGOS IS WORKING