Analysts Warn against Imminent Return of Petrol Subsidy

Chris Ngige

By Peter Uzoho

Some policy analysts have raised concerns over the looming return of the abolished petrol subsidy owing to the continuous interference in petrol pump price by the federal government.

They said since the pronouncement of deregulation of petrol pricing and petrol subsidy abolition, government has still not been able to allow market forces determine petroleum pump price.

They cited the recent announcement by the Minister of Labour and Employment, Dr. Chris Ngige, that petrol pump price had been reduced by N5 per litre, with effect from December 14, 2020, as agreed at a meeting between the ministry, organised labour and other stakeholders.

In a joint statement, a policy analyst and Convener, Let’s Do It Right Initiative, Olaitan Philips, said that the minister’s announcement was an indication that Nigeria may soon be back to the era of petrol subsidy.

He said the government had spent over N10 trillion up to 2018 and had also spent a staggering unbudgeted amount of over one trillion naira on petroleum product subsidy in 2019 alone.

He said Ngige’s announcement needed to be interrogated by Nigerians to know why the government should be making such pronouncement that contradicts its stance on a free market price regime for the downstream sector.

Philips said: “Many pertinent questions arise from this pronouncement by the Minister of Labour and Employment, Dr. Chris Ngige.

“Should petrol pump prices really be fixed by mere negotiations between the government and labour?

“The pronouncement was abrupt and unanticipated considering there were no consultations with the fuel distributors and the business community that this change of direction impacts.”

He added: “The negotiation between government and labour, arriving at a deduction of N5 does not take into consideration the current rise of international prices for petroleum products and the deteriorating foreign exchange rate.”

Also speaking on the matter, a financial expert, Mr. Anderson Julius, was of the view that the approach of negotiating petrol pump prices between government and labour without the involvement of investors further diminishes investor confidence.

He added that such action was capable of setting an unprofessional precedent that will be difficult to set aside when parameters that constitute the pump price of petrol rose again.

Julius, pointed out that while it was clear that there were many Nigerians struggling with the current economic downturn, loss of jobs and uncertainties for the future, a more direct intervention from the government would alleviate the immediate challenges Nigerians are currently facing.

According to him, direct social programmes in small and medium scale businesses which employ the majority of Nigerians would have a more immediate positive impact on Nigerians.

“Watching the government move from having announced a policy objective and itemising its several benefits and suddenly change its mind with this recent pronouncement under pressure from labour, does not breed a lot of confidence in what government had said previously or its capacity to lead Nigeria out of this economic quagmire.

“This policy flip flop will obviously impact negatively on investor confidence in government policies,” Julius said.

On his part, another financial analyst, Mr. Badru Sadiku, wondered whether petrol subsidy was coming back with such announcement by Ngige.

“Is subsidy coming back? What about the massive corruption government had said subsidies cause? Is eliminating massive corruption no longer important?

“Who benefits from this ‘subsidy fraud’? Are they the ones who have trapped us in this unending rigmarole?

“Who pays those salaries of employees in refineries that are not working and where does the money come from? Do these uneconomic decisions make sense? Can we not see how they are hurting us? Is there an adult in the room?” Sadiku asked.

“Nigeria cannot keep dilly dallying as regards policies that will ensure the growth of the economy and the liquidity for the government to be able to fix the mirage of problems and pains Nigerians are reeling from,” he added.