Economist canvasses total petroleum subsidy removal to reduce budget deficit

He noted that total removal of the subsidy could change the government’s revenue position and check its yearly financial deficit.

 

Dr Bright Eregha, a university lecturer, has called on the Federal Government to totally remove petroleum subsidy to enhance its fiscal revenue position, and engender transparency in the sector.

 

Eregha, who teaches Economics at the Pan Atlantic University, Lagos, made the call in an interview with the News Agency of Nigeria (NAN) in Lagos, on Wednesday.

 

He noted that total removal of the subsidy could change the government’s revenue position and check its yearly financial deficit.

 

Eregha added that the idea of retaining the petroleum subsidy payment, defied logic, due to its nature.

 

“How does one explain that the funds the federal government earmarks for petrol payment, keeps increasing arbitrarily year-on-year at the expense of productive sectors of the economy.

 

“This is begging for attention,” he said.

 

He noted that the total removal of petroleum subsidy would attract new investments, especially in the downstream sector of the economy.

 

“Having new investments in the sector will lead to the emergence of more petrol chemical plants, thereby strengthening our domestic capacity.

 

“Then, we could attain self sufficiency, and the prices of refined petroleum will dip due to the forces of demand and supply,” Eregha said.

 

He noted that the federal government must continue to hold honest conversations with the various labour unions on how to manage the subsidy removal.

 

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“They should come to a compromise and agree on the best way of bringing succour to the people, because they are the most affected.

 

“This is due to the tough economic reality that an average Nigerian is contending with and coupled with the impact of the COVID-19,” he said.

 

NAN reports that the Minister of Finance, Budgets and National Planning, Mrs Zanaib Ahmed, recently said the federal government had quietly removed all subsidies in the power sector, with a plan to gradually end subsidies on petrol.

 

Ahmed, who spoke at a virtual meeting of the International Monetary Fund (IMF), said the current high price of crude oil had further increased petrol subsidy burden on the federal government.

 

She noted that though the government had a setback in its plan to have subsidies on petrol removed by July, it would work with the National Assembly to have it removed in phases.

 

 

(NAN)

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