Business Latest

Nigeria’s fuel subsidy spending hits N10tn in 15 years

Increase in petrol price inevitable –Rewane

Oil marketers in Nigeria are ramping up the campaign for full liberalisation of the downstream segment of the oil and gas industry as Africa’s biggest oil producer’s expenditure on fuel subsidy over the past decade and a half came to around N10 trillion.

Major Oil Marketers Association of Nigeria (MOMAN), Petroleum Products Retail Outlets Owners Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria and other stakeholders on Thursday reaffirmed the imperative of government actualising a policy shift that would empower private operators to oversee the key affairs of the sector themselves.

“It is an industry that requires significant investment to improve service delivery and to generate employment, to help expand and grow the economy, especially at this very trying time.

“We believe that full and total deregulation with appropriate standards and regulation in terms of consumer protection is the way to go. We believe that we need to work with the government to achieve this at the soonest possible time,” said Adetunji Oyebanji, MOMAN’s chairman at the Nigerian Petroleum Downstream Consultative Summit held online yesterday.

“Africa’s largest oil producer spends four times more money subsidizing fuel than building new schools, health centres and equipping new science labs,” Bloomberg had reported sometime in September.

He suggested that strategies could be deployed to forestall the possibility of overcharging end-users when market dynamics are allowed to govern products’ prices.

“We are all interested in the future of the country as stakeholders. But we need to make the right policy decisions at the appropriate time. Nigeria cannot, as we know, continue to subsidise fuel.

Read also: COVID-19: States to get $1.5bn from World Bank as economic stimulus

“Over the last maybe 15 years, we have spent close to N10 trillion subsidising fuel. This is just unsustainable in this environment, and I think posterity will not judge us properly if we don’t take the right decisions; so we will continue to engage government.”

Timothy Okon, Managing Partner at Teno Energy Resources, believes however that government’s subsidy outlay should be spent on education and health.

“Between 2006 and 2018, Nigeria expended $63bn on subsidies. This is an enormous amount of resource for a country that needs to educate its young people, to build health centres, to create the basis for this economy and to create employment opportunities.

“The key thing really is to have the political will to ease out of this current situation, and the ideal time is now when clearly oil prices are low.

“Things like education and health are quite fundamental if you want to redirect subsidies; those are the areas in which you build a more egalitarian society in the future.”

He went further to say: “the energy footprint of wealthy people is far greater than the energy footprint of the poor. So, subsidy is disproportionately skewed towards the wealthy.”

Ronald Adamolekun

Join the conversation

Opinions

About the author

Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

Do NOT follow this link or you will be banned from the site!