Removal of fuel subsidy: Cautious excitement

I have received the news with cautious excitement. The Minister of State for Petroleum in a terse Press Statement made this announcement and two things jumped out. First everybody and everyone now have the right to bring in fuel subject to regulatory quality control and also that the price must not be above N145.

At face value, what this means is that the huge amounts spent annually by government subsidizing the product would be freed up for other essential areas of governance and the tendency to profiteer has also been checked by the outer
price limit stated.

I am kind of excited about this development simply because the fuel industry has now gone back to private sector which should ordinary be the case. The tired excuse that since we produce same, we are entitled to a level of subsidy is as stale as stale can be. The system bred all sort of corrupt practices, with people becoming oil billionaires overnight. Getting paid for products not delivered, breeding all sort of middle men and generally not solving the distribution problems that continue to dog us.

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If this is perfectly implemented, the forces of demand and supply should ensure efficiency both on supply and in pricing giving the buying public options. It should remove the red tape that has characterized the system, leading to increased job opportunities in the sector and a lighter government with the reduced need for government involvement.

The NLC has characteristically jumped up in arms. I think these ones should be ignored since historically all they have really understood is the impact of increased petroleum prices on stagnant wages. They have never had a holistic view of the whole issue and they still make up a tiny minority of the population. Nigerians in the east and some parts of the hinterland have been buying fuel at these prices forever and are really comfortable with this policy since it comes with the small possibility that the prices may come down amidst increased supply.

Like I have said, I am watching cautiously and would do a deeper analysis in the coming days. These are my initial thoughts. Well done to the government for this courage. Let’s keep watching.

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