Oil marketers in Nigeria have advised President Bola Tinubu to consider a gradual relaxation of the removal of subsidy on Premium Motor Spirit (petrol) due to challenges faced by importers in accessing US dollars. This comes after the President ruled out a fuel price hike and subsidy reversal. The marketers suggested looking to Kenya, where the reintroduction of subsidy was necessary to alleviate the adverse impact of its removal on citizens.
The Independent Petroleum Marketers Association of Nigeria emphasized that the removal of subsidy should be reconsidered to mitigate the current economic challenges. They noted that the cost of petroleum products is significantly influenced by the foreign exchange rate, and relaxing the subsidy removal could help stabilize prices in the face of rising exchange rates.
Amid concerns that the exchange rate increase could lead to higher fuel prices, experts believe that a gradual relaxation of subsidy removal could provide relief and stability for the industry. The Independent Petroleum Marketers Association and other industry stakeholders argue that strong and well-capitalized financial entities are crucial to navigating the economic landscape effectively.
The Nigeria Extractive Industries Transparency Initiative recommended a deliberate policy to attract investors and encourage private investment in refining facilities. The need for balanced local and foreign investments, along with a focus on supporting a conducive business environment, is underscored.
Opinion:
The current scenario in Nigeria highlights the complex relationship between fuel subsidies, exchange rates, and economic stability. The suggestion for a gradual relaxation of subsidy removal is pragmatic, considering the challenges faced by importers and the potential impact on consumers. It underscores the importance of carefully calibrating economic policy changes to ensure that they do not lead to undue hardship for citizens and businesses. The call for stronger and well-capitalized financial institutions aligns with the broader goal of ensuring a resilient and stable economy, capable of withstanding external shocks. As the Nigerian government navigates these challenges, finding a balance between subsidy removal and economic stability remains crucial.