Fuel subsidy removal will unlock N6tr yearly, says NECA
The Nigeria Employers Consultative Association (NECA) has supported President Bola Tinubu-led administration’s removal of fuel subsidy, saying it could unlock over N6 trillion in revenue yearly.
Its Director-General, Adewale-Smatt Oyerinde, in a statement, said the fuel subsidy over the years had neither served the interest of the average Nigerian nor promoted enterprise’s sustainability, growth and competitiveness.
He said: “NECA commends the policy thrust of the new administration as enunciated by the President Bola Ahmed Tinubu, during his inaugural address.
“Some of the key issues raised that were germane to the survival of organised businesses and the economy at large include the plan to unify the exchange rates, review of multiplicity of taxes, strive towards a higher GDP growth rate; improving accessibility and affordability of electricity, investment in infrastructure, establishment of agricultural hubs, deepening engagement with Organised Private Sector and removal of fuel subsidy.”
Oyerinde emphasised that fuel subsidy removal could unlock huge revenue, which could be channelled into infrastructure development.
He added that reports had shown that less than three per cent of Nigerians (the super-rich) benefited from the subsidy regime, advising the government that efforts at providing short-term palliatives should be fast-tracked in view of their urgency.
The NECA chief also argued that of greater interest to organised businesses was the implementation framework to drive the policies and level of engagement that will be initiated with the private sector by the new administration.
He said while the call for palliatives and other short-term interventions were valid, experiences over the years had shown that short-term solutions such as the provision of mass transit and cash transfers, as proposed with the $800 million loan, among others, were shallow and not sustainable.
He said: “While the President’s announcement during his inaugural speech that the era of fuel subsidy is gone was met with varied reactions from different stakeholders, the reality remains that the removal is no more sustainable in the face of the nation’s dire financial situation.
“The $10 billion (over N4 trillion at the official rate) spent on subsidy in 2022, which is about 25 per cent of the national budget for that year, and the $7.5 billion (N3.5trillion) budgeted for subsidy from January to June, this year is obviously not sustainable in view of our revenue and debt challenges.
“The announcement by the President triggered the hoarding of petroleum products and inflationary pressures with negative consequences such as increase in fares and the upsurge in prices of goods and services, among others. These pressures will, in the short-term, further erode the purchasing power of average Nigerians, increase the input, operating, and production costs for organised businesses and, if not urgently checked, would result in heightened contraction in domestic production and business activities,” Oyerinde concluded.
