FG And Marketers On A Bumpy Road To Subsidy Removal

Fuel Subsidy And Price Control-Solution To Economic Hardship In Nigeria

The Federal Government, petroleum marketers, and other stakeholders are scrambling to create a smooth transition that won’t jeopardize the welfare of the populace as a result of the anticipated withdrawal of fuel subsidies.

Given the socioeconomic effects on businesses and Nigerians, the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has already advised the Federal Government against considering eliminating the gasoline subsidy without local capacity for refining.

However, the Federal Government claimed that it is now considering the best way to remove subsidies without interfering with Nigerians’ ability to support themselves.

At the Nigeria International Energy Summit in Abuja, Permanent Secretary of the Ministry of Petroleum Resources Gabriel Aduda said the Federal Government was committed to subsidy removal but couldn’t be too specific until all indices were taken into account to make sure the effect wouldn’t be harsh on average Nigerians.

Although the elimination of subsidies has been a topic of discussion for some time, President Buhari, who also serves as the minister of petroleum resources, said everyone in the sector was taking it very seriously.

“We understand the importance of removal of subsidy but we also understand the greater importance of the citizens in the scheme of things. As we speak we are still taking a very close look at how best to achieve subsidy without disrupting the entire ecosystem of livelihood in Nigeria. Because that is our responsibility as government. We have to ensure that the buffers are in place and forex is made available for imports. We have to ensure that supply is available for a minimum of six months to make disruption minimal,” he assured.

He claimed that although there were many aspects to consider, the government was dedicated to them.

The Federal Government must make sure that the local refineries are fully operational before such a significant policy decision is taken in the interest of the majority of Nigerians, according to a recent communiqué from NUPENG signed by the Union’s President and General Secretary, Williams Akporeha, and Afolabi Olawale. NUPENG is not opposed to the removal of the gasoline subsidy.

Olumide Adeosun, the Chairman of MOMAN and the Chief Executive Officer (CEO) of Ardova Plc, stated that the issue of subsidy withdrawal needs to be addressed quickly.

He stated that the subsidy must be eliminated as soon as possible in order for the downstream to be investor-friendly.

“Because if you don’t rip off subsidy in one goal what happens is classic and you get stuck in the middle and you can’t go forward and you can’t move back and you don’t enjoy the benefits of either. We need to be very bold about the decisions we make today, particularly around the hydrocarbon space because it will determine how attractive and bankable our businesses are to the investors” the MOMAN boss advised.

Dr. Tunji Oyebanji, managing director of 11 Plc, made the case that the government must create a clear roadmap and plans for the elimination of subsidies. He also said that the government must continue to step up consultation with the major players in the industry on all matters pertaining to the downstream sector of the oil and gas industry.

There are benefits and drawbacks to any approach the government chooses to reduce subsidies, according to Oyebanji.

“Therefore you need a plan. We all noticed what happened during the redesign of the currency, we don’t want to have such confusion in our industry” he said.

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