‘Banks, oil industry to benefit from removal of N1trn petroleum subsidy’

Experts have made a strong case for the removal of N1 trillion spent annually as subsidy on Premium Motor Spirit (PMS – petrol) and Household Kerosene (HHK), insisting that banks, the downstream and upstream sub-sectors as well as the overall economy will gain while only those who are bent on cheating Nigerians will lose.

They say it not only breeds corruption but also prevents the country from reaping the multifarious benefits associated with deregulation.

Sam Ohabunwa, managing consultant, Starteam Consult, said lending would increase in local banks as importers of refined fuel and local refineries could require more cash, while it would likely bring about a regime of less risky lending to speculators and arbitrage.

In the downstream petroleum sub-sector, there would be increased investment in areas such as refineries, depots, transportation (including pipelines) as well as better competitive markets, increased efficiency and incentives for innovation. There would also be more open and transparent markets and greater opportunity for stability and strategic planning, he said.

In the upstream sub-sector, deregulation would lead to market diversification, reduction of over reliance on exports, increased investment to satisfy more local refineries. Government would equally make huge annual savings (In 2011, subsidy was N1.436trn, 30% of total expenditure,118% of capital budget), develop critical infrastructure, while there would be more investment inflows and higher foreign reserves.

“Imagine what has been achieved with the N300 billion SURE-P funds. The East-West Road is 80 percent completed, even when it was 30 percent in 2006,’’ he said, saying “think about Lokoja-Abuja, Kano-Maiduguri roads, among others. With these achievements, think of what N1 trillion can do for this nation. This is why we must also stand behind 100 percent subsidy removal.’’

Emma Osagie, chairman, Petroleum Downstream Group, LCCI, said it was necessary to sensitise the labour and the masses on what the economy stood to gain from the removal, stating that non-prosecution of perpetrators was a key reason everyone should stand behind removal.

Muda Yusuf, director-general, LCCI, pointed out that the chamber was in support of 100 percent subsidy removal, adding that there was a continuous struggle among forces behind subsidy who were very powerful, pointing out that there must be unanimous stand by all stakeholders to surmount petroleum subsidy.

ODINAKA ANUDU