A renowned economist and public affairs analyst, Dr. Samson Simon, has cautioned the Federal Government against completely removing subsidies on petrol, citing the country’s insufficient domestic refining capacity and potential for monopoly.
Dr. Simon, Chief Economist at Economics & Data Limited, was reacting to Aliko Dangote’s recent interview with Bloomberg TV, where the Dangote Group Chairman advocated for total subsidy removal.
“Theoretically, on paper, removal of subsidy is the best thing, as it frees up resources for critical needs like education, healthcare, and infrastructure.”
“However, we’ve tried removing subsidy before and failed woefully, inflicting maximum pain on Nigerians by hiking fuel prices, while still paying more for subsidy. This indicates a deeper problem.”
Dr. Simon emphasized the need for domestic refining and supply of feedstock to refineries, beyond just Dangote’s control, to prevent monopoly and ensure lower fuel prices.
“I think what we’re not getting right is that we need to ensure domestic refining and domestic supply of feedstock to these refineries. It shouldn’t be limited to Dangote, as he’s a businessman focused on profit, and his monopoly would be detrimental.”
The economist warned against allowing monopoly to thrive in the market, citing the cement industry as an example.
“There should be competition. We’ve been a net exporter of cement, but it hasn’t benefited Nigerians, as manufacturers charge more than the global average.
“Dangote controls over 60% of the market, making him a dominant supplier. This is still a monopoly, and we’re feeling the pains.
“In the same manner, I don’t think this is the right time for total subsidy removal. While we should encourage Dangote, allowing him to be the sole supplier would harm Nigerians.”
Dr. Simon suggested that removing subsidy and reducing fuel prices are not mutually exclusive.
“While removing subsidy, we must find ways to bring down fuel prices. They’re not mutually exclusive; removing subsidy is a means to an end.
“If there’s a strategy to reduce fuel prices without paying subsidy, that would be excellent. The strategy I have in mind is domestic feedstock and domestic refining, not just for Dangote but for the entire oil industry in Nigeria.”
This development highlights the need for careful consideration and strategic planning in Nigeria’s economic decisions, ensuring the welfare of citizens remains a top priority.
