Prof. Kingsley Moghalu is a former Deputy Governor of the Central Bank of Nigeria. (Punch)
Former Deputy Governor of the Central Bank of Nigeria, Kingsley Moghalu says millions of Nigerians do not understand the economic problems associated with fuel subsidy.
Moghalu in a series of tweets on Monday, May 1, 2023, said Nigerians need to be educated on the disadvantages of the scheme on the economy of their country.
According to him, for Nigeria’s economy to be revived, petroleum subsidy removal must be actualised within the next three months.
“Petroleum subsidy must be removed if Nigeria is to have a chance at economic revival. The problem is that millions of Nigerians are not well educated on the disadvantages of the subsidy and the fraud it perpetuates on the economy.
“This education, plus a well-conceived program (public transport, advisedly) to reduce the potential inflationary impact of subsidy removal, must happen over the next three months, then subsidy should be removed. Even with the subsidy for several decades, life has still gotten progressively worse for Nigerians. #NoExcuses,” Moghalu tweeted.
The presidential candidate of the Young Progressive Party in the 2019 elections expressed his views on the unending debate about petrol subsidy days after the FG reacted to a recent controversy about its plan on subsidy payments.
What's FG’s plan on petrol subsidy
Contrary to the recent report that the Federal Government has suspended its plan to bring an end to subsidy payment for petroleum, the Minister of Minister of Finance, Budget and National Planning, Zainab Ahmed, has dismissed the reports, saying the government did not suspend the plan.
Instead, the government according to her, “expanded the subsidy removal committee to include teams from the incoming administration and the state governors”.
She said the government has concluded that the subsidy must be removed as it is not sustainable, but there is still a need for further consultation with the incoming administration.
“We agreed to form an expanded committee that will be looking at the process for the removal of the subsidy, including determining the exact time as well as the measures that need to be taken to provide support to the poor and the vulnerable,” she said.
World Bank supports fuel subsidy removal
In September 2022, the World Bank promised to support Nigeria’s move in phasing out regressive fuel subsidies.
The financial institution had earlier warned that the increasing fuel subsidy posed a high risk to Nigeria’s economic growth, despite the increase in oil prices.
According to the World Bank, the high level of oil prices will affect countries that are shielding the impact on their consumers through fuel subsidies.
It added that the high cost of fuel subsidies, due to the increase in oil prices, may deteriorate Nigeria's fiscal balance.
Tinubu promises to remove petrol subsidy
In November 2022, the FG announced its readiness to do away with petroleum subsidies by June 2023. It’s one month to the deadline and it’s not yet certain if the government would go ahead with the plan.
But the president-elect, Bola Ahmed Tinubu, whose administration begins on Monday, May 29, 2023, has made his stand known on the matter.
During the build-up to the 2023 presidential election, Tinubu while campaigning in December 2022, vowed to discontinue fuel consumption in neighboring countries.
He insisted that if elected, fuel subsidies would be removed even if Nigerians protest against it.
What's the implication of fuel subsidy removal?
In August 2022, when the official pump price of petrol was ₦165 per litre, the Minister of Finance, Budget and National Planning. Dr. Zainab Ahmed said the landing cost of refined PMS was around ₦448 per liter.
So, if the government stops subsidizing fuel consumption today, fuel will become expensive as a liter of petrol may rise to over ₦450.
PULSE.
