Fuel subsidy removal will improve forex earnings, GDP – Obat Oil boss

The Chief Executive Officer of Obat Oil and Gas Group, Mr Akinfemiwa Akinruntan, Tuesday said the removal of fuel subsidy from the Premium Motor Spirit (PMS), popularly known as petrol, has huge benefits. He said the benefits include improvement in foreign exchange earnings which would lead to a boost in infrastructural development and an increase […]

The Chief Executive Officer of Obat Oil and Gas Group, Mr Akinfemiwa Akinruntan, Tuesday said the removal of fuel subsidy from the Premium Motor Spirit (PMS), popularly known as petrol, has huge benefits.

He said the benefits include improvement in foreign exchange earnings which would lead to a boost in infrastructural development and an increase in GDP.

Daily Trust reports that there have been mixed feelings in the country over the subsidy removal which jacked up PMS pump price to over N500 per litre. 

In a statement, the Obat Oil boss noted that as more funds were made available to the government from the subsidy removal, such funds would be used to fund education, healthcare, electricity, security, among others.

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He said, “Eliminating subsidies will free up allocations that could be spent on providing infrastructure such as roads, education, healthcare, electricity, security, job creation, downstream industry development and improve GDP growth.

“It will also combat product theft, pipeline vandalism, environmental pollution, currency shortages, and provide basic benefits to the entire community. It is essential to highlight the fact that subsidies do not help Nigerians buy refined products at prices significantly below market prices. 

“Perhaps the most important fundamental change, strong enough to deal with corruption and mismanagement, is less political than the economic development and growth associated with efforts to improve it. 

“Fuel subsidies have been a growing liability for Nigeria’s budget allocations for nearly four decades. I support President Bola Tinubu’s recent removal of fuel subsidies.”

He further said the amount of subsidy spending from 2005 to 2022 “is equal to the total budget of the past six years for health, education, agriculture and the military.”

He noted that the subsidy removal would end the opacity in the subsidy payments by the Nigeria National Petroleum Company Limited (NNPCL).

He added that, “When it comes to fuel prices in our country, politics trumps economics. Much of the NNPC withholding is spent on fuel subsidy payments, which are prone to abuse and overspending. I believe that anyone who does not support the abolition of subsidies is the enemy of the people.” 

Speaking on the impact the newly inaugurated Dangote Refinery will have on the nation’s oil and gas sector, he noted that the most notable impact of the Dangote Refinery would be an increase in domestic refining capacity which would reduce imports.