Abuja – Mr Godfrey Ipeju, an Energy Analyst, said removal of fuel subsidy would help reduce government spending and facilitate more development in the oil and gas sector.
Ipeju told the News Agency of Nigeria (NAN) on Thursday in Abuja that if government removed subsidy, it would channel its resources to rebuilding the refineries.
“The removal of fuel subsidy will produce short-term pain but long-term benefit.
“Subsidies are reverse taxes and if removed, will reduce the disposable income of consumers in the short term.
However, it will result in an efficient redistribution in income, spur a rehabilitation of the refineries and an efficient oil industry in the long run; short term pain but long term gain,’’ he said .
According to him, it will reduce the pressure of the exchange rate on the naira and lead to long term appreciation of the national currency.
Ipeju added that the benefits of subsidy removal were usually long term which would be solely determined by how the appropriated subsidy funds would be utilised to support optimal productivity within the economy.
He said if the subsidy was removed today, the pump price would jump but would be guided solely by global oil prices and would not be at the mercy of oil marketers.
He noted that the impact of various strike and fuel scarcity was severe and almost crippled the economy.
This, he said, could be averted if subsidy was addressed and put to rest, adding that there was the need for the passage of the Petroleum Industry Bill (PIB).
NAN reported that the Managing Director, International Monetary Fund, Ms Christine Lagarde while addressing the National Assembly, had advised the Federal Government to consider the removal of subsidy.
She said that most of the people who benefited from the subsidy were the rich.
”Indeed, fuel subsidies are hard to defend. Not only do they harm the planet, but they rarely help the poor.
“IMF research shows that more than 40 per cent of fuel price subsidies in developing countries accrue to the richest 20 per cent of households, while only 7 per cent of the benefits go to the poorest 20 per cent.
” For example, continuing the move already begun by the government in the 2016 budget to eliminate resources allocated to fuel subsidies would allow more targeted spending, including on innovative social programmes for the most needy,” she said.
But mixed reaction had continued to trail the idea of subsidy removal as some Nigerians believed that it would add more pain to the suffering witnessed in the country.
Mr Isaac Iwuchukwu, a public servant, said that if government should remove subsidy, it should be ready to increase salary of civil servants.
He said that if fuel price increased, transport fair, house rent and food stuff would also go up.
“You know how things work in Nigeria; we use every opportunity to punish ourselves; if they want to remove the subsidy, they should prepare the civil servants and increase salary.”
Also, Malam Abdul Sani, a motorist, said he would support it if the removal would make the product to be available.
“I hate queuing for several hours to buy fuel; It is not a good experience; if they want, they can remove it, though people will suffer, after a while it will normalise,’’ he said.(NAN