Minister of Information and Culture, Lai Mohammed, has said it was the wrong time for the Federal Government to remove subsidy on the pump price of petrol.
In the last five months, Nigerian National Petroleum Company (NNPC) has expended N1.27 trillion on subsidy of premium motor spirit (PMS)— about 31 percent of the N4 trillion provision for the year. Subsidy or under-recovery is the underpriced sales of PMS, better known as petrol.
Minister of Finance, Budget and National Planning, Zainab Ahmed, had said petrol subsidy was “hurting the nation” and limiting the federal government’s ability to service debt.
The International Monetary Fund and the World Bank had also raised concerns about Nigeria’s petrol subsidy.
The Federal Government had postponed the planned petrol subsidy removal till further notice, citing “high inflation and economic hardship.”
In an interview with Reuters, Mohammed said: “When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so.”
He said many other countries had introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.
However, the Lagos Chamber of Commerce and Industry (LCCI) has called for the removal of fuel subsidy to address the persistent fuel scarcity in the country.
LCCI’s President, Dr. Michael Olawale-Cole, at LCCI’s Quarterly news conference on the State of the Economy in Lagos, yesterday, also stressed the need to boost local refining.
He said the removal of fuel subsidy would reduce effects of the crises on production and prices in the country.
“We expect to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs. There are, therefore, heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022.
“Fuel subsidies should be removed and oil theft curtailed if not eliminated to provide fiscal space for subsidised production of goods and services as well as for infrastructure, health, and education financing.’’
Olawale-Cole said that the hike in prices of petroleum products globally and rising energy costs would most likely weigh on Nigeria’s manufacturing outputs in the third quarter of the year.
He said the price levels would continue to aggravate production costs, which may lead to restrained manufacturing and eventual job losses.
He said that while the Central Bank of Nigeria (CBN) embarked on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector was sustained for Micro, Small and Medium Enterprises (MSMEs).
Olawale-Cole said that the chamber’s position on the rising inflation rate was that government must invest more on boosting supply and cushioning the cost of production.
According to him, the worsening security situation in many parts of the country would continue to threaten agricultural production, manufacturing value chains, and logistics.
Olawale-Cole said that globally, the combined forces of rising inflation, weakening growth, worsening disruption to supply chains from the Russia-Ukraine war, had heightened the concerns about stagflation.
He also charged the Federal Government to take seriously the completion of projects like the Trans-Saharan Gas Pipeline, a planned natural gas pipeline from Nigeria to Algeria.
This he said if tackled could make the country to explore the opportunity of exporting gas to Europe in the long-term.
“We should also target Trans-Saharan and European markets with the ongoing construction of the Ajaokuta, Kaduna, and Kano Gas Pipeline, popularly known as the AKK Gas Pipeline.
“Arising from the calamities of this war, Nigeria can explore emerging opportunities to earn huge foreign exchange inflow in the medium to long-term,’’ he said.