The Lagos Chamber of Commerce and Industry (LCCI) has differed with the Federal Government on whether or not fuel subsidy should be retained.
The government had on Monday said it decided to sustain the policy to avoid “social disharmony and… instability.”
It also lamented yesterday that no company was interested in drilling crude oil in Nigeria “today except Nigerian National Petroleum Corporation (NNPC) and a few other partners.”
President Muhammadu Buhari had last month explained that the government made a U-turn on subsidy removal to avoid worsening high inflation and economic hardship in the country..
But the LCCI argued yesterday that subsidy removal would put an end to the perennial fuel scarcity in the country.
The LCCI, however, argued that fuel subsidy removal would reduce the effects of fuel scarcity on production and prices in the country.
“Fuel subsidies should be removed and oil theft curtailed if not eliminated, to provide fiscal space for subsidised production of goods and services as well as for infrastructure, health, and education financing,’’ said LCCI’s President, Michael Olawale-Cole.
Olawale-Cole suggested during LCCI’s Quarterly news conference on the State of the Economy in Lagos, that local refining needed to be boosted by attracting more investments.
He also warned that the hike in prices of petroleum products globally as well as rising energy costs would most likely weigh on Nigeria’s manufacturing outputs in the third quarter of the year.
According to him, the price levels will continue to aggravate production costs, which may lead to restrained manufacturing and eventual job losses.
Olawale-Cole said that the chamber’s position on the rising inflation rate was that government must invest more in boosting supply and cushioning the cost of production.
He added: “We expect to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs.
“There are, therefore, heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022.”
Earlier yesterday, Managing Director of the NNPC Limited Mele Kyari had lamented that financing had become a major challenge in the oil and gas sector because the country is no longer able to” reinvest in the sector.
Acknowledging a “clear natural decline in crude oil production,” Kyari told participants of the 21st Nigeria Oil and Gas conference in Abuja, that the world needed to come together since the transition from fuel to gas was fast becoming a reality.
He said “ The world needs to speak with each other and we are engaging with our partners the European Energy Commission, other multilateral institutions that are involved in energy transition conversation that in reality that we must be supported.
“And that support must come in two ways. One is to accept that gas will be the transition fuel of choice. “Therefore, funding must come. We are the number three gas country. We should be number one… We can’t do this unless we have the right financing.
“Also, Nigeria is the number one oil reserve in Africa, we should be the number one producer of fuel but today we have our challenges.
“Today, what we are trying to do in the world is to beef up production, you can’t wish it away. “This is the time to rejig our financing strategy to make sure that companies and multilateral institutions talk to each other in a manner that ultimately, we are able to put money where it is and also keep the money for the renewables.”
The NNPC boss warned that if the world refuses to invest in the industry, it would certainly witness the collateral effects.
Kyari also announced that President Buhari would unveil the NNPC Limited soon.
Minister of State for Petroleum Resources Chief Timipre Sylva insisted at the event that the time was not ripe for Nigeria to abandon its hydrocarbon energy.
Sylva said: “The oil-producing countries are currently having conversations around moving away from fossil fuels to an energy mix dominated by low carbon sources of energy, renewables.
“For us in Nigeria, fossil fuel will always have a share in our energy mix for the foreseeable future, and we will not at this time abandon our fossil fuels. We have, however, adopted our vast gas resources.
Organisation of Petroleum Exporting Countries (OPEC) Secretary-General Mohammad Barkindo, who also spoke at the event, noted that there was a distorted conversation against hydrocarbon.
His words: “Unfortunately, the policy narrative in the run-up to and during COP26 last year in Glasgow, UK was heavily distorted against hydrocarbons and divorced from the reality of the world’s energy needs.
“ Developing countries were urged to turn their backs on their own hydrocarbon assets, even though their right to sovereignty over the use of these natural resources is carved in the Paris Agreement’s principle of equity in the context of sustainable development.
“The misleading pronouncements are terribly unfair to many of us in this industry who have dedicated ourselves to working towards inclusive, just and sustainable solutions to the climate challenge.”
