Dr Samson Simon, an economist and public affairs specialist, has encouraged the Federal Government not to heed advice to completely eliminate petrol subsidies.
Simon, the Chief Economist at Economics & Data Limited, was responding to an interview with Bloomberg Tv in which the Chairman of Dangote Group, Aliko Dangote, pushed the government to entirely withdraw subsidies.
He did, however, say it was not the correct thing to do at the present because the country has sufficient local refining capacity.
In an exclusive interview with Bmmblog, he stated that “theoretically, on paper, removing subsidies is the best thing since it frees up resources to address more vital state needs such as education, healthcare, and infrastructure.
“But we have tried to remove subsidies and failed miserably, and while we have inflicted maximum misery on Nigerians by raising the pump price of fuel, we are still paying more for subsidies, indicating a problem somewhere.
“I think what we are not getting right is that we need to ensure domestic refining, and then domestic supply of feedstock to these refineries, by the way it should not be limited to Dangote, because Dangote is a businessman, he is after profit and when he is a monopolist, he is even more dangerous.”
The economist also warned against permitting monopolies to thrive in the market, predicting that Nigerians would suffer as a result.
“There should be competition. We have been a net exporter of cement for quite some time, and it has not been a blessing in the sense that those who manufacture cement charge higher prices than the global average.
“So, while domestic refining does not always result in reduced pricing, we must maintain competitiveness.
“Even in cement, I understand that Dangote is not the sole manufacturer, but he controls more than 60% of the market. One of the characteristics of a monopoly is the presence of a dominating supplier rather than a solitary supplier; nonetheless, it is still a monopoly, which is why we are all suffering.
“In the same way, I don’t believe now is the appropriate time. Yes, Dangote should be encouraged, but we may still suffer enough. If we allow him to be the lone person today, all of us will experience the pain.”
He went on to say, “While we try to remove subsidies, we must also look for ways to reduce fuel pump prices; they are not mutually exclusive in the sense that we can still remove subsidies; it is simply a means to an end; you are not requesting subsidies for the sake of subsidies, but to have a lower pump price.
“So, if there is a method to cut down the pump price of petrol while not paying for subsidies, I think that will be fantastic; there is nothing better than that.
“And the approach I have in mind is domestic feedstock and domestic refining, not just for Dangote, but for Nigeria’s whole oil industry. That will go a long way towards solving the problem.”