The All Progressives Congress candidate in the 2015 Akwa Ibom governorship election, Umana Okon Umana, has backed the federal government over the introduction of new pricing framework for petroleum products in the country.
Mr. Umana, in an opinion article he sent to PREMIUM TIMES on Sunday, argued that fuel subsidy, as implemented by previous governments in the country, favoured only wealthy Nigerians, and not the poor.
“Outside Lagos and Abuja and other major cities where the controlled price of N86 was enforced, fuel was sold at between N150 and N180 in the rural communities,” said Mr. Umana, a retired public servant who rose from being the director of budget, to becoming permanent secretary, and then a commissioner in the Akwa Ibom State’s Ministry of Finance, before he was later appointed secretary to the state government.
Mr. Umana said the government guaranteed price of N86 for a litre of fuel was only a myth.
He said findings by the IMF showed that globally, the bottom 20 per cent of households took only seven per cent of fuel subsidy, while the richest, who were 20 per cent took 43 per cent, adding that fuel subsidy in Nigeria at some point accounted for 30 per cent of the total expenditure of the federal government, and 118 per cent of the capital budget.
“Payment of oil subsidies was not only not sustainable, it crowded out spending on core infrastructure projects such as roads, railways and power with grave consequences for the standard of living of Nigerians,” said Mr. Umana, who was trained as an economist at the London Business School.
“Besides, the artificially low and government guaranteed and subsidized price of fuel was a disincentive to private investment in the oil sector.
“It is not surprising that although the Federal Government approved over 20 refinery licences to private investors, not one refinery has been built.
“Rather than subsidizing the consumption of imported petroleum products we should support the private sector to build new refineries.
“Fuel subsidy also took a disproportionate share of dwindling foreign exchange allocated based on official rate. There was therefore an imperative need to free the resources deployed for the payment of fuel subsidies.
“Thankfully, government has made meaningful appropriations in the 2016 capital budget to upgrade infrastructure in the areas of roads, railways, agriculture, education, and provide support for small businesses.”
Mr. Umana also disputed the claims that Nigerians were paying too much for fuel, compared to other West African countries like Ghana, Togo, and Cameroon.
He said at N145 per litre, the price of petrol in Nigeria was still about the lowest in West Africa.
“Ghana, Cameroon, Mali, Senegal and Mauritania have petrol pump prices of N185, N218.9, N228.85, N234.82 and N256.71, respectively,” he said.
“It is now clear why at the old price of N86, the opportunities existed for arbitrage and corruption as fuel for which Nigeria already paid subsidy was smuggled to Niger, Cameroon, Ghana, and other countries where there is no subsidy regime.”
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