16 April 2019

Nigeria: How Nigeria Can End Fuel Subsidy, Increasing Debt Profile - NECA

Nigeria Employers' Consultative Association, NECA, yesterday, expressed concern over the resurgence of fuel scarcity across the country, and the return of fuel subsidy debate in Nigeria, saying NECA was disturbed at the corruption-ridden fuel subsidy regime and the increasing debt profile of Nigeria.

Giving insight into how Nigeria could end the fuel subsidy regime and unsustainable increasing Nigeria's debt profile, Director-General, Mr. Timothy Olawale, in Abeokuta, Ogun State, said government should do the needful by immediately putting in place a process and enlightenment machinery that would lead to the deregulation of the downstream oil sector and a deliberate disengagement from the debt burden

He said: "Like a sore that has refused to heal, the recurrent issue of fuel scarcity has reared up its ugly head again. We are where we are today because, despite past sound counsel, the government has not been faithful to the deregulation of the PMS market in the downstream sector. Let us ponder and ask ourselves where the non-deregulation of the petroleum sector has led our economy: continued dependence on offshore sources for petroleum products, supply perennial shortage of petroleum products, loss of productive man-hours as a result of endless hours spent at filling stations, massive and unimaginable corruptions in the management of the subsidy dispensation, etc.". These, he averred, are not sustainable.

"Over the last decade, the country has spent over N9 trillion on fuel subsidy, about N15.5 trillion on Capital Expenditure, N2.1 trillion on health and about N3.9 trillion on education. This is a misplacement of priority and shows that critical developmental items such as education, health and infrastructure have suffered due to the expenditure on fuel subsidy."

"By and large, the fuel subsidy regime has succeeded in creating phoney and an emergency billionaire at the expense of millions of pauperised Nigerians.

"We are concerned at the growing debt stock of the nation with a huge percentage of the budget, in the last decade going to debt servicing. Borrowing could have been permissive, given the state of the economy in 2015 but not to the clearly humongous level it has turned out to be. Incurring debt for developmental purposes is not in question, but the over N24.39 Trillion debt stocks taking over 20 per cent of the annual national budget to service should be enough source of worry. Though the argument of debt to GDP ratio is tenable, the IMF warned that Nigeria's Debt-to-GDP Ratio, though good, is risky and cannot be guaranteed going forward. Government should do well to manage the rising debt profile, both at the states and federal levels as this trend portends a gloomy future for the nation.

"Increasing debt profile and the corruption-ridden fuel subsidy regime are twin-evil that has clogged the wheel of the Nation's march towards development in the last decade. Government should do the needful by immediately putting in place a process and enlightenment machinery that will lead to the deregulation of the downstream oil sector and a deliberate disengagement from the debt burden."

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