The best & sincerest way to remove petrol subsidy in Nigeria is not Agbado & Emilokan Agberometric way
By AF Dowell Mirin
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Critically, subsidy should be removed, without hesitation, but in removing fuel subsidies in Nigeria, it requires careful planning and consideration to mitigate potential negative impacts on the economy and the general population. Here is a suggested strategy for gradually removing fuel subsidies in Nigeria:
Conduct a comprehensive assessment: Begin by conducting a thorough assessment of the current fuel subsidy system, including its costs, beneficiaries, and impact on the economy. This assessment will provide a clearer understanding of the existing challenges and help in designing an effective strategy.
Establish a roadmap: Develop a detailed roadmap outlining the phased approach such as:
- Phase 1. Year 2023 remove 35%/L
- Phase 2. Year 2024 increase removal to: 55%/L
- Phase 3. Year 2025 increase removal to: 65%/L
- Phase 4. Year 2026 increase removal to: 70%/L
The implement all in phases all the blow:
Ensure the roadmap includes clear timelines, milestones, and the necessary legislative and policy changes required for implementation, as indicated above.
Communicate and build consensus: Launch an extensive public awareness campaign to educate citizens about the need to remove fuel subsidies and the long-term benefits it will bring. Engage with stakeholders, including civil society organizations, labor unions, and business groups, to build consensus and address concerns.
Implement price liberalization: Gradually transition from fixed fuel prices to a market-based pricing mechanism. This can be done by implementing periodic price adjustments that reflect international market prices, considering factors such as exchange rates, crude oil prices, and transportation costs.
Targeted social safety nets: Establish targeted social safety net programs to protect vulnerable groups, such as low-income households, from the potential adverse effects of fuel price increases. These programs can include cash transfers, subsidies for essential commodities, and improved access to healthcare and education, while repeating Tier 1 here as Tier 2 Phase removal:
- Phase 1. Year 2023 remove 35%/L.
- Phase 2. Year 2024 increase removal to: 55%/L
- Phase 3. Year 2025 increase removal to: 65%/L
- Phase 4. Year 2026 increase removal to: 70%/L
Invest in alternative energy sources: Allocate a portion of the funds saved from fuel subsidy removal to invest in renewable energy infrastructure and alternative energy sources. This will help diversify the energy sector and reduce dependence on fossil fuels, ultimately creating a more sustainable and environmentally friendly energy system.
Strengthen public transportation: Improve and expand public transportation systems to provide affordable and accessible alternatives to private vehicle ownership. Investing in reliable and efficient mass transit systems can help mitigate the impact of fuel price increases on transportation costs for the general population.
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Monitor and evaluate: Establish a robust monitoring and evaluation framework to assess the impact of fuel subsidy removal on the economy, inflation rates, and welfare indicators. Regularly review the progress made and makes necessary adjustments to the strategy based on the findings.
It is important to note that the implementation of such a strategy requires strong and collective political will of Governors in Nigeria, effective governance, and transparent institutions (NNPCo).
It is also crucial to ensure that the savings from subsidy removal are properly managed, reinvested in critical sectors, and utilized to stimulate economic growth and development, such as:
- Power Infrastructure
- Medicare and Medicaid
- Education
- Economic Realty Base National Salary Structure.
These are thoughts, and beliefs, on how Subsidy should be removed.
