The Nigeria Governors Forum (NGF), on Wednesday, said any action taken on fuel subsidy removal must directly benefit the people, and not just a few wealthy individuals and their cronies.

The forum’s chairman and Governor of Ekiti State, Kayode Fayemi, stated this when he met with the leadership of the Nigeria Labour Congress (NLC ) in Abuja.

Abdulrazaque Bello-Barkindo, Head, Media and Public Affairs, NGF in a statement on Wednesday in Abuja, quoted Fayemi as saying that the nation’s economy was at the precipice and that it had become necessary for the NGF and organised labour to verify the claim on fuel subsidy by the Nigerian National Petroleum Corporation (NNPC).

According to Fayemi, governors must be part of the solution providers because subsidy removal has remained an on-going conversation.

“Nigerian governors cannot ignore the economics of petroleum, this is because all the countries surrounding Nigeria including Niger, Mali, Cameroon and Ghana have their fuel pump price that is equivalent to a U. S dollar, while Nigeria has a pump price that is far less than a dollar.”

He continued, “We need a partnership with the NLC to confront the challenges of what the NNPC is about, because there is a lot of fraud in the consumption and distribution figures that the country is getting.” NAN quoted him as saying,

Fayemi stressed that if the NLC engages all those who are knowledgeable in the field like PENGASSAN and conducts a thorough research into the sector there will be progress.

He, however, pleaded with NLC to jettison the decision to embark on nationwide protest.

Fayemi urged them to join hands with governors to consider the dimensions at play on the subsidy removal.

Why are oil subsidies bad economics?
Every year, the Nigerian government runs huge budget deficits that could have been avoided if money budgeted for oil subsidies was allocated to other critical projects.

Subsidies should be used to spur investment in activities that raise the productive capacities of an economy (such as education, health, entrepreneurship, and infrastructure). They should be targeted at strategic sectors of the economy. They should not be used to finance non-durable consumption items like petrol.

Oil subsidies are inequitable, as they transfer the national wealth to those who own several cars and add little or no value to the national economy.

In lieu of subsidies, the government should invest massively in public transportation and boost the transport allowances of public-sector workers.

Removing fuel subsidies would also be good for the environment and safety on Nigerian roads. When motorists pay the full economic price for petrol, they will drive less, emit less pollution and reduce the incidence of road accidents.

There should be a clear communication to Nigerians that the removal of fuel subsidies favours the poor, and eliminates one of the several perks that the Nigerian elites undeservedly enjoy

The proponents for fuel subsidy removal argue that it has become eminent to remove fuel subsidy as the government needs to spend the revenue generated from crude oil on other meaningful projects. For instance, the federal ministry of finance and budget office revealed that between 2006 and 2018, Nigeria lost N9.84 trillion on subsidy payments.

In the same vein, another proponent argues that the fact that Nigeria cannot boast of making substantial growth despite the recent surge in crude oil price is enough evidence that it is high time Nigeria stopped subsidizing its petroleum products.

For instance, the IMF recently speculated that even though Nigeria’s revenue has grown as a result of the increased price of crude oil at the global level, Nigeria might not be able to save much due to higher security spending and increased public debts. Also, the IMF revealed that fiscal deficits are projected to stay above the pre-pandemic levels with public debts rising to 43 percent in 2026, except a drastic measure is taken