NIGERIA CAN’T AFFORD RETURN OF PETROL SUBSIDY — AWOGBENLE
Nigerian author and communication strategist, Seun Awogbenle, has warned that Nigeria cannot afford to restore petrol subsidy, arguing that such a move could reverse economic reforms and worsen the country’s financial challenges.
Awogbenle made the remarks on Thursday while delivering a speech at the National Policy Dialogue organised by the Institute of Legislative Studies, University of Ilorin.
In his presentation titled “Interrogating the Political-Economic Substance of the Debate on Fuel Subsidy Removal versus Restoration: Which Should Interest Nigerians?”, he argued that the removal of petrol subsidy in 2023 was necessary to address longstanding weaknesses in the nation’s public finances.
According to him, before the policy was discontinued, the government was spending a significant portion of its revenue on fuel subsidies while accumulating debts and struggling to meet other financial obligations.
He explained that the previous subsidy arrangement had become unsustainable, with the government effectively borrowing to maintain artificially low petrol prices.
Awogbenle acknowledged that the removal of the subsidy, alongside other economic reforms, had created serious difficulties for Nigerians, particularly through increased food prices and transportation costs.
However, he maintained that restoring the subsidy would not solve the underlying economic problems.
He described calls for its return as dangerous, warning that reversing the policy could undermine progress made through foreign exchange reforms and other economic adjustments.
The author also questioned proposals for a producer-based subsidy, including suggestions that crude oil should be supplied to local refiners at discounted rates.
He argued that Nigeria’s existing crude oil commitments and financial obligations could make such an arrangement difficult to sustain.
Awogbenle further questioned how the government would finance the difference between market prices and discounted prices, particularly given the financial responsibilities of federal, state and local governments.
Rather than restoring petrol subsidy, he urged the government to use available fiscal resources to cushion the impact of economic reforms on vulnerable Nigerians.
He identified food affordability and transportation costs as two major areas requiring urgent government intervention.
He also encouraged state governments to invest in mass transportation schemes to reduce the burden of rising transport fares on households.
Awogbenle maintained that Nigeria should focus on improving productivity, strengthening its economic foundations, attracting investment and promoting industrialisation instead of returning to policies he considers financially unsustainable.
He stressed that the success of economic reforms should ultimately be measured by their ability to improve the living conditions of ordinary Nigerians.
