Former Minister of State for Petroleum Resources, Professor Ibe Kachikwu has lauded the decision of President Bola Tinubu to proclaim the removal of the petrol subsidy.
He, however, said refurbishing the nation’s refineries, and investment in gas resources will make subsidy removal less painful and more instructive.
Kachikwu stated this while speaking with Nigerian Tribune on the sidelines of a special seminar organised by the Centre for Petroleum, Energy Economics and Law, University of Ibadan, held at the Conference Centre of the university, on Thursday.
He described the removal of subsidy as key in the pragmatic implementation of the Petroleum Industry Act (PIA), adding that the benefits of subsidy removal outweigh those of keeping subsidy thereby continuously paying huge fiscal penalties.
He, however, said the government must embark on short-term measures that would not make Nigerians bear the brunt of the subsidy removal for too long.
Among other measures, Kachikwu said the government committing the money saved from subsidy into refurbishing the nation’s refineries and investment in gas resources would provide Nigerians some relief and justify the removal.
He noted that the benefits of subsidy removal should be seen in freeing up resources for other sectors, reducing Nigeria’s dependence on imported fuel, and more jobs.
The minister of state for petroleum under the President Muhammadu Buhari administration added that he expects the government to incentivise domestic refineries to produce more petroleum products thereby boosting the nation’s economy.
To make the nation’s refineries work optimally, Kachikwu said government handing off the nation’s refineries would become inevitable.
He said he remained an advocate of joint partner ventures and privatisation of the nation’s refineries such that private capital, private initiative, and private capacity, run the refineries.
Kachikwu said: “The Petroleum Industry Act (PIA) needs to be a lot more pragmatically implemented. The subsidy issue is key. The government did the right thing in removing the subsidy. Remember, as a minister, I moved the prices from N90 to N140. I think they are doing the right thing. However, there are things that need to be done simultaneously with doing that, to make subsidy removal less painful and obviously much more instructive. Certainly, addressing the refineries would be key.
“If you find that a lot of money saved from subsidy is put into refurbishing the refineries, for example, that will be a quick fix. If you provide some of that money to investment in gas resources, that will be a quick fix.
“So, there are things that need to be done so that on a shorter rather than medium-term period, you will find that the benefits of subsidy removal will outweigh the benefits of keeping subsidy and paying such huge fiscal penalties.
“I have always felt the government should privatise our refineries. Remember when I was there when I tried to move for the refineries to come back, we did go to Saudi Arabia at the time to get someone manage the refineries on a joint venture, but we never took off on that. We did go to China, we did go to India which I what I am beginning to see happen now.
“The reality is at some point the government is going to hand off some of these activities and get private investors. We even got to the point of doing a bid to select some Nigerians on a joint venture basis to take over the refineries. Those bids were finalized, and people were selected but it never went forward. Ultimately, you have got to get private capital, private initiative, private capacity into these refineries.
“I love to see NNPC privatised but not privatise and put their hands round the whole assets but privatise and bring joint partner ventures to invest, run and be able to make these refineries stand the test of time. We have refineries as old as ours in Ivory Coast and they are running at 95 percent capacity. I like to see that here.”
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