The importance of fuel subsidy to Nigerian economy Just like Nigeria Airways and Nigeria Telecommunications Limited had

to die to allow the aviation and telecommunications sectors to be transformed, we have to allow Nigeria National Petroleum Corporation/Petroleum Products Pricing Regulatory Agency/Petroleum Equalization Trust Fund and Power Holding Company of Nigeria to die to transform the downstream petroleum and power sectors; it is as straightforward as that. For decades, these statutory behemoths that are agencies of the Federal Government which were saddled with rendering critical public services to improve the quality of life of the Nigerian people have abused, oppressed, distressed, emasculated, subdued, harassed, overwhelmed, damaged, disorganized, and stressed the very people they were created to serve, and in the process became laws unto themselves. Neither NNPC/PPPRA/PETF nor PHCN can be reformed, upgraded, revived, transformed, reengineered, overhauled, rebooted, realigned, reprogrammed, or reconfigured as they are bastions, bulwarks, fortresses, and strongholds of corruption, nepotism, cronyism, racism, terrorism, manipulation, trickery, deception, religious and ethnic discrimination and everything vile and sadistic about monopolistic public service rendering agencies in Nigeria. Just as is happening in the power sector where the Electricity Regulatory Commission has been set up to regulate the power sector, the best things that can happen to Nigerians is for the Federal Government to hands off the management of the downstream petroleum sector especially regarding petrol spirit and Kerosene, and confine itself to regulatory responsibilities and functions through the Department of Petroleum Resources. As regards what can be done with the N1.5 trillion savings that will accrue to the coffers of government from the complete deregulation of the petroleum products sector, I beg to differ from those who want the savings ploughed into improving our infrastructure, and would rather want the savings invested in paying for gas projects that will enable us utilize the 75% of gas that is presently being flared by the International oil companies. Many Nigerians are not aware that Nigeria is actually a gas producing nation with crude oil, a resource which Farouk Al-Kasim, the Iraqi who

played a key role in helping Norway to successfully manage its petroleum resources, has called the fuel of the future for the next 50 to 100 years, and that even now the international oil companies have positioned themselves in the gas sector with projects where Nigeria is the minority shareholder. From the already operational Nigeria Liquefied Natural Gas Company in Bonny (49%), to the Brass Liquefied Natural Gas Company (30%) where funding for construction is just being raised and the proposed Olokola Liquefied Natural Gas Company (30%) where a shareholders agreement has been signed, Nigeria has only minority stakes because the NNPC which represents its interest claims it cannot meet its funding obligations for these projects. The worst of the lot is the Escravos Gas to Liquids Projects, a project by Chevron to obtain 100, 000 barrels of high grade diesel from gas, where NNPC on behalf of the Federal Government has only 25% stake on the understanding that Nigeria need not put any cash down, but that Chevron will build the plant and recoup its expenses before dividends can be paid, and with the project cost rising from $2.3billion to $7.6billion even at only 75% completion, no one knows when Nigeria will get any dividends from the EGTL. With N1.5trillion ($7.5billion) yearly savings from the removal of fuel subsidy, Nigeria can conveniently establish and fund enough gas projects in the Niger Delta area for the next 10 years that will not only meet its domestic gas consumption, but will be more than enough to light up and power the industrial and household needs of all African countries, and thus transform the fortunes of what evil men have called the dark continent. To finance its infrastructure development, the Federal Government is already raising in excess of N2 trillion from taxes through the Federal Inland revenue Service alone, which can easily be reeved up through the liberalization of the company registration process to ensure that we have over 10 million registered companies in the next 5 years up from the paltry 800, 000 today so as to get more Company Income Tax and Value Added Tax. Then Nigerians will no longer be tormented, terrorized, brutalized, traumatized, and harassed by PENGASSAN and NUPENG, the two main labour unions in the downstream petroleum sector, who while masquerading as public interest bodies, are neck deep in the corruption in

that sector and embark on strike actions at the slightest threat to what is in their narrow minded interest DISADVANTAGES OF FUEL SUBSIDY The withdrawal of the subsidy would cause fresh inflationary pressures resulting from sharp increases in transportation cost. High inflationary expectations across all sectors of the economy would have a devastating impact on the psyche of the common people as the new policy poses a serious risk to their survival. There would be sharp increases in operating costs of micro and small enterprises, many of which rely on small electricity generators powered by petrol. If well implemented however, it is expected that the policy will benefit the economy and the citizens, in the medium to long term. ADVANTAGES OF FUEL SUBSIDY 1. its pointed out that the advantages of the subsidy would bring increased private investment in the downstream oil sector with a corresponding impact on the creation of quality jobs. 2. There would be reduction in the pressures on foreign reserves, a huge chunk of which is currently being used to fund fuel importation. 3. There would also be better fiscal space to ensure macroeconomic stability with a resultant positive effect on the economy. 4. Government hopes that the removal will: Save government about US$6B per annum 5. Help address the great imbalance between recurrent and capital expenditure in Nigeria. 6. Encourage foreign investment in downstream infrastructure 7. Free more funds for local investment in the oil sector 8. Increase local refinery production 9. Reduce importation of refined products in the medium to long term 10. Eventually stabilise market prices as completion increases