It is no longer news that the Federal Government has concluded plans to remove the controversial fuel subsidy after several years of debates. President Goodluck Jonathan took a firm decision to remove the subsidy when he presented budget 2012 to the National Assembly without allocation for fuel subsidy.
Prior to the budget presentation, government had declared its intention to remove the subsidy, suggesting that the Premium Motor Spirit (PMS), commonly known as petrol, may be sold for N120 per litre from January 2012, as against the current pump price of N65 per litre.
Government further revealed that the N3.4 trillion spent in subsiding fuel in the last few years went into wrong hands, thereby hindering economic growth even as it stated that the masses and oil marketers are not benefiting from the subsidy money as widely speculated. While labour says it will resist the attempt by government to enforce the action, some analysts believe the removal of fuel subsidy will stir inflation in the economy and the effect will spread to other sectors of the economy. Experts express their views:
Manufacturers will be worst hit — Mr. Silas Igwe, an entrepreneur:
Manufacturers will be the worst affected because the cost of production will rise due to increase in the price of petrol. Also, the prices of raw materials will go up. Already, there are indications that the manufacturing sector of the economy is going under as over 55 per cent of manufacturers closed shop in 2009, according to the statistics released by the Manufacturers Association of Nigeria (MAN).
Already, a greater number of MAN’s members are out of business and, with epileptic power supply and increase in the price of fuel, there is tendency for more manufacturers to close shop. So many things are working against manufacturing in Nigeria. These include erratic supply of electricity, influx of foreign products into the local market and lack of infrastructure for efficient production.
We will spend more money on production — Mr. Olusoga Sonaike, managing director and chief executive officer, Eagle Package Printing Limited— Subsidy is not the solution to economic woes facing the country. There is the urgent need for government to create jobs in order to achieve its Vision 20:2020 target. The problem of erratic supply of electricity is already taking its toll on the local manufacturers and the entire economy.
So, with increase in the price of fuel, it means we are going to spend more money as the cost of production, which will in turn push up the prices of goods in the market. Beyond infrastructure development, government should have a unified tax system that will address all the issues of taxation in the country. A situation whereby the three tiers of government are involved in the collection of taxes is not good for the industrial sector of the economy.
Fuel subsidy removal will trigger inflation because prices of goods in the market will go up- Mark Iloh, Registrar, International Logistics and Administration— Removing subsidy when the nation still imports petroleum products for its daily consumption will impact negatively on the economy, strangulate Nigerians and increase social security challenges. Therefore, government should focus on two major issues using the available resources to fix the refineries and make electricity available to Nigerians.
The subsidy spent on local consumption of petroleum products in Nigeria is as a result of importation. So, it is important that Nigeria, with its huge resources of petroleum products, needs no subsidy but local production of these resources that will give the citizens fair prices for petroleum products. The issue of subsidy can be viewed in these three context: politically, economically and socially. The essence of government is to improve its citizens and ensure economic growth (government should not be for the rich and people become poor).
The removal of subsidy will impact negatively on the social and economic life of the citizens in the following: Transportation: This is one major area the fuel subsidy removal will greatly affect. Today, a litre of fuel is N65 and the fare on Lagos-Badagry route is between N100 and N150. So, if fuel is sold at N140 per litre, consider what the cost of transport would be, on that route and what policy is there to increase the purchasing power of the people?
Food: The movement of food items/production depends on transportation. Therefore, food prices will hit the roof top.
NUPENG is against deregulation that will bring hardship to the people-Western Zonal Chairman, National Union of Petroleum and Natural Gas Workers (NUPENG), Tokunbo Korodo: NUPENG is against deregulation that would bring more hardship to the masses. Petrol is used on daily basis by everyone in this country and companies also make use of this product to run their generators due to erratic supply of electricity.
So, government should have a rethink and put the refineries in good shape to ensure adequate supply of petroleum products to the consumers. Government has a responsibility to provide basic things for the citizens, so we are not in support of deregulation that would add to the suffering of the people.