Economist Urges Caution on Removing Petrol Subsidy in Nigeria
Dr. Samson Simon, a renowned economist and public affairs analyst, has cautioned against the total removal of subsidy on petrol in Nigeria, citing the country’s insufficient local refining capacity as a major concern.
Simon, who is the Chief Economist at Economics & Data Limited, made this statement in an exclusive interview with Media Talk Africa, reacting to the recent call by Aliko Dangote, the Chairman of Dangote Group, for the government to completely remove the subsidy.
While acknowledging that removing the subsidy might seem theoretically beneficial, freeing up resources for more critical state needs such as education, healthcare, and infrastructure, Simon emphasized that the country has previously attempted to remove the subsidy and failed miserably. This, he said, has led to maximum pain for Nigerians, with the pump price of fuel still increasing despite the removal of the subsidy.
Simon instead emphasized the need for domestic refining and the supply of feedstock to these refineries, warning against allowing Dangote or any other company to become a monopolist in the market. He noted that even though Dangote is not the sole manufacturer of cement, his control of over 60% of the market makes him a dominant supplier, leading to higher prices for consumers.
The economist also cautioned against removing the subsidy without a clear strategy to bring down the pump price of fuel. He suggested that a domestic feedstock and domestic refining strategy, not limited to Dangote but for the general oil industry in Nigeria, could help address the problem.
Simon’s concerns highlight the complexities involved in addressing Nigeria’s energy challenges, where the government must balance the need to reduce subsidies with the need to ensure affordable fuel prices for citizens. As the country navigates this delicate balance, it is essential to consider the long-term implications of any policy decisions and to prioritize the well-being of its citizens.
