Citing research, indicators and across-the-country analysis, renowned economist and Head, Department of Economics, University of Ibadan, Professor Adeola Adenikinju has posited that there is no direct impact of an increase in the price of Premium Motor Spirit (PMS), as a result of fuel subsidy removal, on the trend of inflation in the country.
Discussing findings of a research, at a reflection seminar, organised by the Nigerian Institute of Social and Economic Research (NISER), Ibadan, Adenikinju said while the price of petrol had gone up 250 per cent, the adjustment that had happened to prices of goods and services had been minimal and muted, in some cases.
He highlighted the various anomalies around Nigeria’s petroleum pricing under the subsidy regime, with a particular reference to the 2009 and 2020 pricing templates that pass the brunt of inefficiencies to consumers.
Rather than the poor being cajoled to believe that they would suffer the most over fuel subsidy removal, he said the rich and smugglers greatly benefitted from subsidy removal and hence were at the forefront of calls for subsidy not to be removed.
He argued further that if the government hands off, the benefits of the fuel subsidy removal will be seen in the coming months.
Adenikinju highlighted the benefits of the post-subsidy era including that more private refineries will be built.
Rather than the continuous allocation of billions of dollars for turnaround maintenance, he said there was a need to sell off and privatise the four government-owned refineries.
Delivering his own paper, acting Head, Economic and Business Policy Department, NISER, Louis Chete harped on the need for immediate compensation mechanisms for Nigerians.
He added that the post-subsidy era was expected to provide higher economy-wide benefits, provide government deplore workable compensating mechanisms, including e-wallet programme for smallholder farmers, mass transit schemes, digital-enabled cash transfer scheme, free health care for the vulnerable, transport vouchers, among others.
Chete noted that a mix of strategies will place an appropriate valuation on the nation’s natural resources while delivering higher welfare benefits to Nigerians.
In her remarks, Director-General, NISER, Professor Antonia Simbine, said a resolution of the fuel subsidy conundrum with its attendant racketeering and corruption was long overdue.
While noting that President Bola Tinubu’s administration had taken the bull by the horns by announcing fuel subsidy removal, she noted that government must evolve a palliative package to build public support and gain legitimacy for the policy.
She, however, said immediate implementation of compensation measures should be combined with a reduction in the cost of governance as well as blocking loopholes of wastage.
Panellists at the seminar themed: ‘Fuel Subsidy Removal: The Why, How and Way Forward,’ questioned the palliative provided to cushion the effects of fuel subsidy removal.
Even in implementation, the panellists expressed fears regarding whether the real beneficiaries will be reached.
Associate Professor of Political Science, Dr Tunde Oseni said he feared that the lack of accountability and transparency that bedevilled the fuel subsidy scheme may also deck the implementation of compensation measures.
He argued that the gains of fuel subsidy removal must be immediate, warning that monsters could be created if people don’t see the gains in a short while.
Speaking, a consultant in International Development Practice, Dr Omowumi Akin-Onigbinde said while it is agreed that the fuel subsidy scheme was not beneficial to the masses, she said it will be disappointing if the palliatives derail.
Others who made inputs at the seminar were Chairman, Nigeria Labour Congress, Oyo State Council, Kayode Martins; a Risk & Strategy Expert/Banker turned Multipreneur, Folakemi Fatogbe.
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