Director-General, Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, has called for the removal of subsidy on petrol describing subsidies as “repressive and suffocating regulatory framework” which prevent foreign investments and negatively impact the economy while increasing corruption rate.
Yusuf said, “The increasing burden of petroleum subsidy is an offshoot of the deregulation conundrum which is a major cause for concern. The subsidy regime in its current form is not sustainable. “We have the huge economic cost of petroleum subsidy and the inherent huge fiscal leakages which are clearly unsustainable.
There is the social cost of the possible increase in petrol prices and the worry about a possible backlash. There is the adverse investment effect on the petroleum downstream sector resulting from policy uncertainty and inconsistencies. Private investors will be reluctant to invest in petroleum refining if the subsidy regime persists.”
Yusuf however stressed that change in policy had to be strategically processed and suggested that petroleum products could be sold at a subsidised price with the NNPC retail stations in charge of that on a limited budget. He said, “The reality is that the deregulation of the petroleum downstream sector is inevitable if the economy must progress and put an end to the corruption that comes with the subsidy regime. But the policy transition needs to be strategically worked out. “There could be a social pricing window in the interim where petroleum products could be sold at a subsidized price.
The NNPC stations could be so designated since they exist in all parts of the country. The government will have to provide a limited budget for this.