Nigeria waste N10 trillion on fuel subsidy — BudgIT
NEWS DIGEST – BudgIT, a leading civic organization that applies technology to intersect citizen engagement with institutional improvement, to facilitate societal change, has asked President Muhammadu Buhari to remove fuel subsidy.
The group noted that Nigeria is dancing on the edge of a razor blade by continuing its subsidy regime.
“To the detriment of socio-economic developments, Nigeria has spent nothing less than N10 trillion on petrol import subsidy between 2006 and 2018,” noted a statement by Shakir Akorede, the Communications Associate of BudgIT.
According to a recent research by BudgiT titled “Nigeria’s Petrol Subsidy Regime: Dilemma of the World’s Most Populous Black Nation”, the group noted that Nigeria currently imports an average of 91% of its daily petrol needs, thus disproportionately exposing local petrol prices to price shocks from international factors of production and exchange rate volatility.
“The continuation of petrol price regulation perpetuates safety nests for exceptional forms of corruption within the country’s subsidy regime. Import subsidy creates petrol price arbitrage – the differential between the regulated price in Nigeria and the high petrol prices in neighbouring countries – which is big enough to incentivise smuggling of subsidized products to neighbouring border towns. According to NNPC, there are 2,201 petrol stations in Nigeria’s porous border towns and coastal frontiers, with a combined fuel tank capacity of 144.9 million litres. Analysts argue, ringing corruption alert, that the population around that area is far from justifying the size of the petrol market,” added the statement.
BudgIT noted with dismay that “fuel subsidy” deprives Nigeria of funds needed for critical socio-economic development as it discourages investors, who generally prefer a deregulated industry, from investing in the downstream sector especially in the area of refinery construction and operation.
It added that the 10 trillion consumed by the subsidy regime is sufficient to construct 27,000MW of electricity or build about 2,400 units of 1000-bed standard hospitals across 774 local government areas of Nigeria.
“It’s high time fuel subsidy is removed. Efficient palliative measures should be provided for those that will be worse hit by the removal. Four sectors – Transportation, Power, Health and Education – should be prioritized to cushion the effects” stated Gabriel Okeowo, BudgIT’s principal lead.