By Adewale Sanyaolu
With an estimated N12 trillion spent on fuel subsidy over the last 12 years, economic experts at the weekend lamented that the huge public sector inefficiency especially in the downstream petroleum and power indsutry is fast pushing the economy to the brink of collapse amid Federal Government’s dwindling revenue in the wake of COVID-19 pandemic outbreak.
While many observers who spoke to Daily Sun argued that the retention of subsidy policies on fuel and electricity that benefit only the rich was no longer sustainable in the face of current global economic downturn, they posited that Nigeria’s subsidy regimes have constantly crowded out resources needed for development financing in several key sectors of the economy.
The Nigerian economy which has been in dire need of investments in basic infrastructures, lost so much from government’s infamous subsidy regime seen as the result of inefficiencies on the part of some agencies of government.
For instance, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, recently recalled that the Muhammadu Buhari administration had set aside N305 billion for fuel subsidy payments in the 2019 budget.
The administration ever announced it ended the subsidy regime in March of 2020 with the introduction of a price modulation policy.
But the subsidy cost suddenly resurfaced after the COVID-19 pandemic hit the nation’s economy.
Speaking at the public consultative forum on the draft 2022-2024 medium-term expenditure framework/ fiscal strategy paper (MTEF/FSP) in July, Ahmed said subsidy gulps N150 billion every month. However, last week’s announcement by the Federal Government it spends about N30billion monthly on electricity subsidy became the last straw that broke the Camel’s back.
But according to the National President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) Mr. Billy Gillis-Harry, subsidy especially for petrol and electricity is not good for economy as it only benefits the rich.
Harris explained that subsidy in the electricity sector was baffling as he does not understand the methodology the government used in arriving at its conclusion that electricity is being subsidised.
‘‘We do not want any resources of government to be frittered away in the name of subsidy. So let all forms of subsidy be removed and in its place, let us have what will impact the average Nigerian.” He said
He further explained that the government should now sit down with its economic managers to work out how all the subsidies that have been removed can now be re-injected into the economy to stabilise it.