Friday, May 3, 2024

Subsidy removal: Nigeria to gain over ₦1tn annually – FG

Uba Group
NIGERIA stands to gain more than N1 trillion annually from petrol subsidy removal, the Federal Government has said.

The increased earnings, it added, would be channeled towards funding critical needs of the economy.

The Minister of State for Petroleum, Timipre Sylva, explained this in a chat with journalists in Abuja on Thursday, saying a subsidy regime would only provide an opportunity for “rich and unscrupulous Nigerians” to steal and further enrich themselves at the expense of the economy.

He said, “The problem around deregulation is that people must understand first that the product we are talking about is a derivative of crude oil. It is refined from crude oil. Therefore, it has a direct relationship with the price of crude oil. If the price of crude oil goes up, then you expect that it will reflect in the price of the derivative.

“The best time to achieve this is the time when crude oil prices are low so that Nigerians will get the benefit of those low prices. In March, when we announced the deregulation, the prices were low and that advantage was transferred to the consumer.”

“So, we brought down the price of petrol. The unfortunate thing is that when we brought down the price of petrol, nobody reacted in the market place. The prices were the same. Nobody reduced their prices because the price of petrol had reduced,” he added.

According to him, with the reduction, bus fares, taxi fares remained the same.

He said, “Prices did not go down when we reduced the pump price of petrol. We thought that those people in the market; transport drivers and transport owners would reduce their prices. But nobody reduced their prices. But anytime there is even a kobo increase in the pump price of the product, you see that people will increase their prices three-fold.

“At this moment, let Nigerians not be fooled; there are people who are ready to take advantage of every situation to create anarchy and chaos. And it is these people that are at work now. Is anybody saying that this policy direction is a wrong policy direction?

“That is the discussion we should be having. If it is a wrong policy direction, why has every successive government attempted to do the same thing? It is something that is unsustainable. The subsidy is unsustainable. Subsidy means that you buy the product at a certain price and then you reduce the price and sell it at a loss to the people.”

The minister explained that in a subsidy regime, the country must also subsidise the effects used to import the product.

“So in the end, the subsidy is going in two ways. It is like burning your candle from both ends. How long can that candle last? So in the wisdom of the President and all of us, we felt that it was time for Nigerians to face reality and do the right thing,” he noted.

He said, “What is deregulation going to do? It is going to free up a lot more money. At least from the very beginning, it will save us up to a trillion naira and more every year. Already, we have taken the budgetary provision for the subsidy, which is about N500 billion.

“Also, we have taken off the excess forex price, that special rate, that was given to NNPC which also came at a cost. So, all the money that we used to defend the Naira at that time to subsidise the dollar will now be freed up for development.

“And I believe that, going forward, we will begin to see more development, a lot more money available to the government that will be put into critical infrastructure instead of being burnt in our cars.”

Sylva added, “Let us look at subsidy critically. Who are the beneficiaries of subsidy? When a few years ago, you had this subsidy scam all over the place; all the monies that were taken by all the subsidy thieves and so on. How many poor people were among those people?

“Subsidy only provides an opportunity for rich and unscrupulous Nigerians to steal and enrich themselves at our expense, at your expense. So, ladies and gentlemen, deregulation is actually a policy direction that is good for the common Nigerian.”

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