By OBINNA EZUGWU
The Lagos Chamber of Commerce & Industry (LCCI) has called for gradual withdrawal of fuel subsidy, noting that it understands the concerns that total withdrawal will inflict more economic hardship on Nigerians.
The chamber which made the call in statement by Dr. Chinyere Almona, its Director-General, in response to the decision of federal government to suspend its plan to remove fuel subsidy on Monday, noted that the government cannot afford to continue to pay N1.5 trillion on subsidy, while conceding the concerns of Nigerians about the implications of it withdrawal are genuine.
It therefore, asked the government to pursue phased withdrawal while gradually developing critical infrastructure to enhance economic productivity.
The chamber also asked the government to ensure that the recently signed Petroleum Industry Act (PIA) is implemented fully.
“The signing of the Petroleum Industry Bill into law by President Muhammadu Buhari, GCFR on the 16th of August 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 statement said.
“The Chamber 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 2021. 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.
“With a monthly payment of about N250 billion to subsidize fuel consumption, the implication is that an additional N1.5trillion expenditure has to be provided for in the 2022 federal budget. With additional expenditure against the projected revenue, deficit financing will be needed to support the budget expenditure. We are likely to see government borrow more than projected to finance the bloated expenditure in the face of revenue mobilization challenge.
“In the face of this dilemma, we recommend that the removal is phased and with a complement of heavy investment in critical infrastructure that supports production in the economy. More production means more job creation, poverty reduction, and improved economic growth.
“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 for 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.”