“In an economy with huge deficit in economic and social infrastructures, it (subsidy) was simply scandalous. It is in the overall interest of the economy and citizens for it to be discontinued,” Yusuf said in an emailed statement shortly after the government announced the removal of subsidy.
He explained that the overregulation of the sector and the subsidy regime had put enormous pressure on government finances and the country’s foreign reserves, making it unsustainable.
The LCCI DG said the petroleum subsidy management had been characterised by serious transparency issues for several decades with the blatant corruption in the fuel subsidy regime being “the more disturbing component”.
“For several years, the Nigerian economy suffered severe bleeding from this phenomenon; with subsidy payments in the one trillion naira threshold, and even more,” he said.
He called for complete deregulation of the oil and gas sector as it would greatly benefit the economy.
One benefit according to him is that it will free resources for investment in critical infrastructures such as power, roads, the rail systems, health sector, education sector etc.
He added, among other things, that it would also boost investment in the downstream oil sector, especially in petroleum product refining.
“This will ultimately reduce importation of petroleum products and ease the pressure on the foreign exchange market as well as foreign reserves,” he said.
Yusuf, however, stressed that for the objectives of the new policy to be achieved, the current foreign exchange policy needs to be urgently reviewed to improve liquidity and transparency in the foreign exchange market.
“Only a limited success will be achieved if the current rigidities in the management of the foreign exchange market persist,” he said.
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