THE PROS AND CONS OF PETROLEUM SUBSIDY REMOVAL

The Petroleum Industry Act (PIA), signed into law in 2021, provides for total deregulation of the Nigerian downstream oil and gas sector under Section 205, which implies the removal of subsidy to create a level-playing ground for the sector.

This means that petrol will be obtainable in Nigeria at the same value as the international oil price. In other words, the government will cease to pay subsidy, which has been the difference between international oil price and existing pump price, and local consumers may have to purchase petrol at around N750/N800 per liter.

Pros:
The notable advantage of subsidy removal is that it will enhance proficiency and uninterrupted product supply in the sector due to the government restricted activities, create a level-playing ground for marketers and promote massive investment in the downstream oil and gas value chain. The policy is also expected to curb the fiscal deficit that stems from subsidy payments.

Cons:
The obvious disadvantage of subsidy removal is the negative effect it is expected to have on consumers. Considering the weak power of Naira to Dollar and the income level of major households, it is unlikely for an average consumer to afford petrol at the projected rate. If all variables are not properly managed, removing subsidy would have contagious effects on other sectors as an inflated petrol price will trigger inflation on other commodities and services. Nigeria is a fuel-dependent economy, and many industries depend on its consumption to operate.

As it stands:
This is the second week of April, and we have less than three (3) months to the June 2023 deadline for subsidy removal. A plan that may meet resistance from both labor unions and the public over lack of clarity regarding the availability of social investment programmes and other measures to cushion the effects of the policy on the citizenry.

What a dilemma..

Been a Nigerian is indeed a great work,you have to be strong 💪🏽 and tough.

walexGodson:
Been a Nigerian is indeed a great work,you have to be strong 💪🏽 and tough.

Yes o