Organized to set agenda for the incoming government on the perennial issue of fuel subsidy and the nation’s fiscal condition, lead speakers have agreed that there is an urgent need to boost production by diversifying the economy in order to increase revenue; although they differ on when fuel subsidy should be removed.
In his intervention, Prof. John Chizea, the Head of Department, Baze University, Abuja said that removal of fuel subsidy is long overdue, and advised the incoming administration to deregulate if it plans to succeed. The professor of economics while noting that there would necessarily be a period of shock in the economy when subsidy is removed, said that the current subsidy regime is unsustainable.
He said that low economic output/production and inability to cater for local consumption is a trajectory for upward inflation curve, stating that whether or not subsidy is removed, inflation will continue to mount.
The don argued that fuel subsidy in its present form permits too many leakages, and is in fact contrary to the provision of the PIA, and should be removed, as the lack of private sector participation in the industry will continue to weaken the value of the naira to dollar.
He urged Nigerians to braced up for a period of shock in the interest of the future, as deregulation will limit government involvement and bring about the needed competition for growth; adding that it will address issues of oil theft and vandalism, as no private player would commits resources into a project and permits the invasion of its facilities as currently experience in the sector under government control.
Prof. John while speaking on the nation’s fiscal condition remarked that the economy is heading towards a debt overhang, especially if it continues with the current subsidy regime, as there would be shortage of resources to fund loans and invest in capital expenditure. He recommended that the incoming administration should take steps such as cutting cost of governance, diversify the economy, reduce task burden, and increase productivity in order to grow the economy.
On his part, Jet Philips, the Executive Director of Exceral International Center argued that the removal of fuel subsidy at this material time will exacerbate the hardship and inflation which is currently at a record level (22.22 %). He added that if fundamental issues of corruption around the cost of turnaround maintenance on our moribund refineries, and the inability of the country to meet its production quota, removal of petroleum subsidy may address little to nothing in real economic sense.
Also responding to the issue of the nation’s fiscal condition, Jet said that the country must address legal and regulatory lapses so as tackle systemic corruption. He also pointed out that the nation’s fiscal situation cannot be remedied in a climate where government macro-economic policy directions are in conflict.
The speakers both urged citizens to become more active by asking questions and seeking legal redress that will check the excesses of those in power in order to reduce corruption.
The Center is urging the incoming administration to commit to measures that promotes transparency and accountability in government business. Until we address the opacity that characterized most of government’s operations, not much will be achieved with or without subsidy regime.
Image credit: World Bank