By Thompson ABISOLA
An economist, Dr Bright Erega, on Thursday said total removal of subsidy on oil and unrestricted pricing of electricity would unlock potential in the Nigerian economy.
Erega of the Economics Department, University of Lagos, made the remarks in Lagos against the backdrop of U.S. views on total subsidy removal on oil and controlled electricity tariffs in Nigeria.
The U.S. had on Wednesday, said the Nigeria’s inability to eliminate subsidy on petroleum products and failure to hands off the fixing of electricity tariffs were hampering the development of critical social infrastructure in the country.
The U.S. Ambassador to Nigeria, Mr Stuart Symington, made the remarks at the 10th anniversary colloquium of Nigerian Development Finance Forum organized by Financial Nigeria Magazine.
Symington blamed the inability of the Federal Government to discontinue subsidy and allow market forces to determine electricity tariffs for the poor social service delivery in Nigeria.
He spoke through the Country Mission Director in the U.S. Agency for International Development (USAID), Mr Stephen Haykin.
The ambassador attributed the low investment in the social services sector by government at all levels to low revenue from taxes and inefficient tax system.
He said that removal of oil subsidy and eradicating controlled tariffs on electricity would unlock their prospect.
“I am in support of the ambassador’s views for government to stop interfering in these sectors for the sectors to be improved upon.
“The removal of subsidy in the oil sector will lead to new investment in the entire value chain in the oil industry.
“As the forces of demand and supply should drive the price in the electricity sector in order to create efficiency,’’ he said.
The economist said the immediate economic hardship that would come with the removal of government’s interference in the sector would be in the interim.
“The economic hardship associated with this policy will be in a short time, but the gains will be seen in no distant time.
“Few years ago, government implemented same policy in the telecommunication sector and today the people and the economy is better of,’’ he said.
He said the huge funds being expended on subsidy on oil could be earmarked for improving the standard of living of the generality of Nigerians.
“The human development index will be improved upon with some percentages allocated for education and health care increased. Doing this will improve the living standard of Nigerians overtime, especially in the hinterland,’’ he said.
