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EDITORIAL

Fuel subsidy removal and its impact on Nigerians

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FUEL Subsidy is that fraction of the price of petrol borne by government on behalf of consumers so as to ease the price burden on them. Subsidies were first introduced in Nigeria in the 1970s as a response to the oil price shock in 1973. They exist because the government fixes the price of petrol for consumers below international price and uses government resources to pay for the difference.

EVEN though subsidy removal according to the Bretton Woods Institutions, is in the overall interest of the economy as the freed up funds would be channeled to improving infrastructural amenities especially in health care, education and transport sectors so as to accelerate growth and entrench the structural reform agenda, government still thought it wise to keep implementing it so as mitigate the sufferings of its people. But with the recently announced deregulation of the downstream sector in the country, it is obvious that government has caved in to the proponents of subsidy removal.

THAT the petroleum sub-sector is characterized by gross corruption, abuse of office, inadequate record keeping, smuggling and inefficiency in addition to the various regimes of fuel price increases, makes subsidy payments amorphous and their effectiveness and otherwise in stimulating economic activities  in Nigeria doubtful.

We, however, are of the opinion that subsidy removal as canvassed by these institutions would be inimical to the wellbeing of the generality of the people. There is hunger in the land and Nigerians are finding it hard to survive thus graduated removal of the subsidy would help if it exists at all.  It is a well known fact that removing petroleum subsidy would have detrimental impact on household income, particularly in poor households.

WHAT is baffling is the number of times Nigerians have been told subsidy on fuel had been removed. Various administrations have at some point claimed to have removed this amorphous and difficult to explain policy yet government keeps paying. If we may ask, who are those collecting these subsidies and for what are they laying claims to such huge amounts that no one seems to understand their application?

We are worried that these are inauspicious times in the development of our country and there is suffering in the land. The cost of living is stifling and the poor are faced with paying higher transport fare, increased price of food and other essential commodities. Therefore, there is the need to do more to cushion the sufferings of this segment of our society.

Since government does not seem to have the capacity to successfully run businesses, it should create the right environment for private businesses to thrive. Individuals like Aliko Dangote who have invested a lot in building a refinery should be given incentives to encourage them. Indeed, some form of tax holidays should motivate and encourage them. Again, government should work at ensuring that adequate electricity is provided to reduce the cost of power and allow industries run seamlessly.

THE generality of Nigerians do not know what subsidy is, therefore, government needs to educate and enlighten the public on the benefits and what have so far been achieved by the many subsidy removals so far.

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