N18bn Daily Subsidy Payment Will Cripple Economy

The chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, has reiterated that the continued implementation fuel subsidy in the country will cripple the entire economy, unless urgently tackled.

While speaking on a Channel TV programme monitored by LEADERSHIP, Yusuf said: “the issue has implications for money supply growth, it has implications for inflation and even exchange rate depreciation. So, the impact is economy-wide, and the impact is systemic.

I know that the issue of subsidy is politically sensitive, but we need to see how we can step out of it even if we have to do it gradually.

“The reality is that outside locations such as Lagos and Abuja, am not sure if the citizens are buying fuel at the current official rate which has moved from N165 and getting to N170. If you speak to people in the East or the far North, they have been buying fuel at a rate that is far above what is called the official rate. Even as we speak, a lot of people are buying at what we called a fairly reflective market rate but I take your point that if we should remove the subsidy suddenly at this time the shock on the citizens will be unbearable and that could lead to social unrest, protest and all of that which we cannot afford at this time. But I believe that we can begin to take steps to gradually phase it out.

“Also, the political actors should have the courage of their conviction. When former president Goodluck Jonathan wanted to remove the subsidy, it was announced but how many of the governors came out to support him at that time? Those in the national assembly who were shouting subsidy must go all kept quiet when a riot broke out, and the president was left all alone to sort it out. So, all the political actors should speak with one voice, there should be further engagement with all the critical stakeholders that we must have an economy before having anything else, and if we allow this subsidy problem to cripple the entire economy, the roof will fall on all of us and we cannot afford to let that happen.

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On daily petrol consumption, he said: “NNPC states that 64.96 million litres per day of petrol is pumped into the market. But whether that is the amount of fuel we consume within this economy is a completely different matter because the structure of pricing predisposes the whole ecosystem to a lot of leakages.

“Leakages first from the corruption point that is associated with this phenomenon, leakages also from smuggling because our borders are extremely porous and this matter is not easy to monitor no matter what you do. So, the only way out is just to phase it out and we have seen this kind of probe before which was the one that consumed Faruk Lawal who was the former chairman committee in the house of representatives and as we speak, he is currently in jail, it was this same subsidy investigation in the house.

“So, there is so much corruption in the ecosystem and this corruption is extremely difficult to deal with and the only solution to it is to remove the platform completely, agreed politically is not expedient but we have to face the reality and we do not want the ship to sink and everyone drowned in the process. I am not saying we should remove it entirely but we should find a way to gradually phase it out and expedite action on the rehabilitation of the refineries, also we have been promised that before the end of the year we will be seeing some results which also a window out of it and coupled with some private refineries that is coming up and whatever we can do to support that let us do so that we can get out of this conundrum because it will continue to hunt us, drive down the economy.

“By the time we add this subsidy claims to the debt service, tell me how much is left for the governance and yet we still have the personnel cost to pay, a capital project to deal with and then the issues of Academic Staff Union of Universities (ASUU) and all other issues that require serious funding, so how are we going to manage it.”