Experts Back Subsidy Restoration
Since the Presidential candidate of the African Democratic Congress (ADC), Alhaji Atiku Abubakar pledged to restore fuel subsidy through a fine-tuned approach, several other experts and commentators insist that there should be restoration of subsidy since its removal has impoverished citizens without any remedy in sight
By Edu Abade
The retention or restoration of petrol subsidy has become the major campaign issue being explored by politicians as the 2027 general elections draw closer.
Presidential candidate of the African Democratic Congress (ADC), Alhaji Atiku Abubakar, had recently stated clearly that he would restore subsidy if he is elected President in 2027, while his counterpart in the Peoples Redemption Party (PRP) Donald Duke believes that subsidy never existed in the first place and as such what does not exist cannot be removed.
On his part, the presidential candidate of the Nigeria Democratic Congress (NDC), Peter Obi and Allied Peoples Movement (APM), presidential counterpart, Seyi Makinde, however said they would retain the subsidy while seeking better management of the petroleum sector to make fuel more affordable.
As politicians and experts argue for and against subsidy, Bongo Adi, a professor of Economics, said, “We can reconsider subsidy. If you do the analysis, subsidy was never Nigeria’s problem, its removal has impoverished citizens.”
He argued that Germany, Italy, Indonesia and many other countries have defended their citizens by subsidizing energy, adding that there was no indication that poverty will reduce in Nigeria under the current system.
“Poverty will always increase, despite the macroeconomic stability, people are still suffering. Other countries are finding ways to ensure that their citizens don’t suffer under the current oil volatilities in the Middle East. There are ways to bring back subsidy so that it doesn’t affect the stability of the macroeconomic gains, it may not be the former way, that’s what other countries are doing.
“There’s subsidy everywhere in the world, countries are subsidizing energy for their citizens, but it depends on the way you do it. The former subsidy benefited people who have no need for it. This time, it’s benefiting the governors, and the citizens are suffering. If you’re doing something and you have achieved some of your objectives, you need to reassess it especially when it’s affecting the citizens negatively,” he stated.
A public affairs analyst, Barrister Abel Iwarah, who lamented the hasty removal of subsidy on day one of the President Bola Ahmed Tinubu in 2023, said removing subsidy by fiat had created severe strains on the wellbeing of ordinary Nigerians.
“Nigeria has abundant oil just like Iran, Libya and Saudi Arabia. But one liter of fuel costs an equivalent of N38 in Iran, N32 in Libya, N828 in Saudi Arabia compared to N1,500 in Nigeria. Now, when you take the minimum wage in those countries into consideration, you will at once notice that everything in Nigeria is tailored towards making life terrible for the masses.
Iwarah said, “In Iran for instance, the minimum wage is N165,000, Libya pays an equivalent of N210,000, while Saudi Arabia pays a handsome N1.4 million as minimum wage compared to Nigeria’s N70,000, which some states have not even started paying. The situation here is appalling!
Those arguing for the return of subsidy, are of the opinion that giving Nigeria’s peculiar scenario, there was the need for the government to reconsider a return of subsidy. They insisted that subsidy removal on May 29, 2023 had caused ordinary Nigerians untold hardship and suffering.
But the Centre for the Promotion of Private Enterprise (CPPE) thinks otherwise and advised the Federal Government against returning to the universal petrol subsidy regime, warning that it could impose an annual fiscal burden of nearly ₦20 trillion on the Nigerian economy.
In its policy brief signed by the Chief Executive Officer, Dr. Muda Yusuf, CPPE said the recent escalation in petrol price has intensified transportation, logistics and production costs, while weakening household purchasing power and worsening competitiveness, increased challenges for businesses, particularly micro, small and medium enterprises (MSMEs).
However, the organization said the solution should not be a return to the old subsidy regime but a combination of preserving downstream petroleum reforms and providing targeted relief to vulnerable households and productive businesses.
