It’s gratifying to hear that the Federal Government, after the National Economic Council (NEC) meeting, has suspended the planned removal of subsidy on petroleum products. Fuel subsidy was planned to be totally removed by the end of President Muhammadu Buhari’s administration.
Relying on a World Bank loan of $800 million palliative to remove fuel subsidy in less than 60 days would not only have thrown the country into turmoil but would also have rendered the in-coming government of President Bola Ahmed Tinubu incapacitated with economic crisis. Besides, it would have been too early for the administration to start grappling with labour crisis.
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Though it is not clear what informed the suspension by the economic council, which consists mainly of state governors and economists, many analysts and economists have always emphasized that without functional refineries, the removal of subsidy on fuel would amount to an insensitive exercise with consequent grievous national socio-economic crisis.
Checks around the world show that there is no country that removed subsidies on petrol that doesn’t have functional refineries at home.
Ghana, a nearby country, which recently deregulated its downstream sector, has three refineries with refining capacities of between 40,000 and 60,000 barrels per day and is also currently building a new one in Takoradi.
Since the past 25 years, successive Nigerian governments have spent huge sums of money on the rehabilitation of the four refineries without result. It is sad to note that after several official promises, no single one of the refineries is functioning.
Though it’s envisaged that the Dangote Refinery and Petrochemicals will come on stream this year with refining capacity of 650,000 barrels per day, the best thing is to wait for that to happen before embarking on subsidy removal. It is, however, to be seen if this much expected Dangote refinery will meet Nigerians’ fuel consumption needs.
On assumption of office on May 29, I expect the in-coming administration to quickly put in place the machinery to ensure the availability of facilities for alternative fuel such as Compressed Natural Gas (CNG) or auto-gas in all the states of the federation. It should also allow local and foreign investors access to foreign exchange for cooking gas importation at an official rate, to lower the price and make it available in the country since production from NLNG alone cannot meet local demand .
