‘Drop In Oil Price, Chance To End Fuel Subsidy’

AGENCY REPORTS, EMEKA UMEJEI
— Dec 24, 2014 | 4 Comments

The tumbling price of oil that has slashed Nigeria’s revenue and shaken currency and stock markets presents Nigeria with an opportunity to discontinue fuel subsidies that amount to $7billion annually, reports Bloomberg.

However, some analysts say that President Goodluck Jonathan may not explore such option with elections in view in February.

“Politics often trumps prudence and there’s an entrenched social expectation for fuel to be subsidized,” said Gareth Brickman, an analyst at Johannesburg-based ETM Analytic, who was quoted by Bloomberg.

“The last time subsidies were reduced, there were widespread protests, and given how contentious the political environment is in Nigeria with the elections and ongoing ethnic divisions, it is likely this will be the case again.”

Managing director of BIC Consulting, Dr. Boniface Chizea, concurs that “the president appreciates that fuel subsidy is a hot potato with elections in view”.

For his part, the president, Independent Shareholders’ Association of Nigeria (ISAN), cautioned that oil slump is just under a few weeks, and therefore not enough reason to rush into removing fuel subsidy, which could backfire when oil prices recover.

“I am an advocate for the removal of fuel subsidy in the oil sector but we do not need to make such decision in haste. We must be very careful,” Nwosu warned.

However, Chizea said it is possible to remove fuel subsidy but with a proviso that the “landing cost must be at least at N97 for it to happen. And that should not in any way translate to increase in pump price as being speculated.”

http://leadership.ng/news/397373/drop-oil-price-chance-end-fuel-subsidy

Any govt with courage would seize this opportunity as it also blocks the largest drain pipe in the economy corruption wise and will virtually neutralise the income loss from falling oil prices. But this step would require a govt with courage, a govt that hates corruption and a govt that gives a damn about the survival of Nigeria and Nigerians.

When we realise that the greatest pet hate of Nigerians is oil subsidy thieves then we will realise why screwing up his courage to the sticking point and saving us from them might just be GEJ's best campaign move. I don't expect the pusillanimous GEJ crowd to find that courage even at the bottom of a cask of kaikai though.

God bless Nigeria!!!

I read the subsidy the pay as at now is just N1 per liter, what is that for God's sake, take away the subsidy and let us pay N98, it doesn't matter afterall most filling stations are selling at N100 or above.
There are better ways of using those subsidy billions.

But there is a maths that is not quite adding up here.

Crude oil prices crashed, subsidy is still in place but pump prices in Nigeria are not dropping like they are dropping all around the world. This is very strange.

Considering how pump prices is central to the economy; cost of goods and services will also reduce at least marginally if pump prices reduce.

On the subject of removing fuel subsidy. I believe that Nigeria must remove or reduce fuel subsidy one day. Also remember that fuel subsidy removal or increment in pump prices amount to tax increase.

But at this point any form of tax increase either through removal of fuel subsidies or other means is too easy. ITS THE EASY CHOICE. Government has to do better than just taking the easy choice.

Fuel subsidy is the only tax rebate or welfare state we enjoy from the Government as Nigerians. It is immoral and quite frankly irresponsible to negotiate fuel subsidy when the NASS will not negotiate their opulent and unsustainable wages.

Removing the subsidy will affect the poor most and yet we have refused to review the cost of Governance.

If Government can publish a plan to reduce the cost of Governance by 50% and reduce the cost of NASS wages by 50% then they will have the moral right to reduce fuel subsidy no matter the cost of crude oil prices.

What I think we need is to reduce the wage bill on NASS and the cost of governance