Olorogun Bernard Okumagba, a member of the Niger Delta Development Commission (NDDC) Governing Board, has declared that ending the regime of gasoline subsidies is in Nigeria’s best interest and has urged all Nigerians to support President Tinubu’s commitment to reviving the country’s economy for the good of all Nigerians.
We applaud the decision of the outgoing administration to phase out the petrol subsidy regime, which has increasingly favored the rich over the poor, according to a press release from Olorogun Okumagba, a former commissioner of finance in Delta State, dated June 1, 2023. Given the depletion of resources, subsidies can no longer be justified by their rising costs. Instead, we will redistribute the funds to better investments in public infrastructure, education, healthcare, and employment that will genuinely improve the lives of millions of people.
Okumagba claims that the 2023 budget only included funding for the petroleum subsidy through June 2023. In effect, there is no appropriation for fuel subsidies beyond June 2023. As a result, the previous administration had already begun to phase out the gasoline subsidy.
In light of this, Okumagba commended President Tinubu for putting the policy into action as part of the government’s overarching plan to revive and productively run the economy for the good of all Nigerians.
According to the NDDC Board member, “The truth is that the fuel subsidy regime has been a drainpipe on our resources and commonwealth. The subsidy regime created a class of corruptly wealthy businessmen and women and some public officers with whom they colluded to inflate consumption figures that determine the rates of subsidy payments.”
The “official” petroleum consumption figures in Nigeria under the subsidy regime, according to the former commissioner of finance for Delta State, have been greatly exaggerated since they serve as the foundation for calculating and disbursing subsidies to importers and marketers of gasoline. The result is that public funds are going into private pockets with no value received for those funds.
As opposed to subsidising individual consumption, which is what we have been doing with the gasoline subsidy, Okumagba argued that it makes more economic sense to support production and productivity. However, it is preferable to subsidise consumption when it comes to necessities like public transportation using buses, waterways, and railroads.
Additionally, he claimed that the regime of gasoline subsidies had, over time, encouraged the smuggling of our subsidised gasoline across the borders of our West African neighbours, where it is more expensive because gasoline is sold at market prices. Marketers who can profit twice as much on international trade than on the domestic Nigerian market, where the price of gasoline is fixed, do so to the great detriment of Nigeria and Nigerians, exhausting our nation’s precious resources and leading to a shortage of gasoline.
In Okumagba’s opinion, our country needs to do more to limit opportunities for rent-seeking and ineffective arbitrage. With subsidy removal, petrol supply (via importation or domestic refining), will become more available and competitive, thereby driving down costs over time.
He lamented the fact that Nigeria had been borrowing money for import subsidies for years. Because a large portion of our earned income is going toward debt repayment, we are currently in financial distress. We shouldn’t keep taking out loans to pay for “petrol subsidies” that don’t produce any income that we can use to pay off the debts, he said..
In addition, Okumagba claimed that more than N13.7 trillion of the country’s meagre earnings, as confirmed by the Nigeria Extractive Industries Transparency Initiative (NEITI) spent on subsidising gasoline consumption from 2005 to 2020, could have been invested more effectively in the vital fields of education, healthcare, and poverty reduction, which are key indices of the Human Development Index (HDI). The figures for 2021 to the first half of 2023, estimated to be over N7 trillion, are not included in this sum.
According to Okumagba, other strategic areas that could benefit from the money saved from the elimination of the gasoline subsidy include agriculture and improved transportation systems. Nigeria has a lot of arable land that is currently uncultivated because it is inaccessible, and good road systems will lower transportation costs and make it simpler for companies to reach both domestic and foreign markets.
Therefore, Olorogun Okumagba urged the Federal Government to develop and implement programmes that will lessen the impact of the subsidy removal on the general populace. Examples include a cash-transfer programme for the underprivileged and a reduction in excise taxes. payable by citizens, subsidy of public transportation by buses, railways, and waterways to free up the earnings of our citizens and increase their purchasing power.