45% price hike: Sentiment of Nigerians not favourable to subsidy removal — Former LCCI DG

By Olayemi  Oladipupo

The Former Director General Lagos Chamber of Commerce and Industry ( LCCI) Dr Muda Yusuf has called on the Federal Government to creatively manage the transition from the current pricing regime to a fully deregulated arrangement because the sentiments among the citizenry are not favourable to the deregulation of petroleum product pricing or subsidy removal.

This was in reaction to the announcement by the Group Managing Director of the Nigerian National Petroleum Company (NNPC), Malam Mele Kyari hinted that a litre of fuel may change from the usual price of N165 and  sell between N320 and N340 in 2022.

He made the statement   during the presentation of the World Bank Nigeria Development Update, November 2021 edition titled “Time for Business Unusual” in Abuja on Tuesday.

“There will be no provision for it legally in our system, but I am also sure you will appreciate that government has a bigger social responsibility to cater for the ordinary and therefore engage in a process that will ensure that we exit in the most subtle and easy manner,” he said.

He had stated during the  programme that  the price of Brent, the benchmark for Nigeria’s crude oil, might  increased by 45 percent.

Minister of Finance Mrs Zainab Ahmed saidjk ok She said: “The subsidies regime in the oil sector remains unsustainable and economically disingenuous.”

However,Dr Yusuf said that the  boomerang effect means Nigeria’s bill for fuel subsidies continues to grow faster at an unprecedented pace, worse enough to threaten the economic health of Africa’s biggest economy.

According to Kyaru, it is a tricky issue which could pose a serious challenge to government if not tactically managed.

“The reality is that  petroleum subsidy removal. Even some elites are curiously not persuaded on the justification for the subsidy removal,” he suggested

Yusuf added that if  the policy transition is not properly managed,  the risk of a social and political backlash could be quite high.

“No doubt there is a sound economic and business case in favour of fuel subsidy removal.  But the social and political contexts are equally critical.

Certainly,  the subsidy is not sustainable,  which is why there is need to accelerate engagement with the relevant stakeholders to come up with a policy transition strategy that is sustainable, realistic and pragmatic.

“The conversation should not only be economic,  but also social and political,” he added.