The Organised Private Sector (OPS) has advocated for more infrastructure to support fuel production which would mean more job creation, poverty reduction, and improved economic growth.
The director-general of Lagos Chamber of Commerce & Industry (LCCI), Dr. Chinyere Almona, stated this in her reaction to the suspension of fuel subsidy removal.
She stated that, “the signing of the Petroleum Industry Bill(PIB) into law by president Muhammadu Buhari on August 16, 2021 was well-received by all major stakeholders and seen as a commendable act by the government.
“The political will to sign the Bill into law was highly applauded because of the expectations of many on the full exploitation of the inherent potentials of the oil and gas sector.”
The chamber, she added, had earlier issued a statement commending the federal government and made a strong case for best practice in the implementation of the Petroleum Industry Act(PIA) 2021, but that, less than a year into the signing of the Act, the implementation has suffered a flip-flop as some of the provisions of the Act are being suspended.
“While we support the full implementation of the PIA and the total deregulation of the oil and gas sector, we are not insensitive to the plight of the masses that may feel the pains of some of the provisions like the removal of fuel subsidies.
“Since the announcement of the planned removal of fuel subsidies, there have been numerous reactions expressing displeasure and readiness to stage protests against the planned action. The government on the other hand had expressed its concerns about the unsustainable subsidy payment which has become a strain on government revenue,” she explained.
With a monthly payment of about N250 billion to subsidize fuel consumption, she said, the implication is that an additional N1.5trillion expenditure has to be provided for in the 2022 federal budget.
Stating that, with additional expenditure against the projected revenue, deficit financing will be needed to support the budget expenditure, she noted that, “we are likely to see government borrow more than projected to finance the bloated expenditure in the face of revenue mobilisation challenge.
“In the face of this dilemma, the major concerns of the Organized Private Sector (OPS) are found in the policy inconsistencies that have tainted our policy environment; the loss of required foreign direct investments (FDIs); and the likely weak implementation of the Petroleum Industry Act (PIA). There is a dire need for more infrastructure to support production which would mean more job creation, poverty reduction, and improved economic growth.”
The LCCI DG said the federal government must consider doing all that is possible not to truncate the implementation of the PIA 2021 which has already brought so much hope to industry watchers as a big game-changer for the oil and gas sector.
“There is a need for stakeholders’ consultations on addressing the implications of lapsed provisions of the Act and forging the way ahead towards the full implementation of the Act. The most sustainable way to go is to increase our local refining capacity and save the huge spending of our forex on importation of fuel,” she pointed out.