“The elimination of the oil subsidy, which is a consumption subsidy if it is carried out in a truly liberalized economy, is a positive development.
“But with the deregulation of the downstream oil sector, prices will be determined by supply and demand.
“Past experience has shown that once there is an increase in the prices of petroleum products, the prices of other goods and services skyrocket and the country plunges into unprecedented hyperinflation,” Aladeitan said.
Port Harcourt Refinery
He said that the burden in the immediate, short and medium term would be overwhelming and the level of poverty would be terribly devastating.
Another oil and gas expert, Mr. Charles Majomi, said that Nigeria had been addicted to fuel subsidies, especially when crude prices were high and were eating up windfall profits that should have been directed at national development.
Majomi pointed out that this was not the first attempt by the federal government to throw off the yoke of this addiction.
“As caught up in corruption as he was, he provided a rare example of benefit to the people. However, its elimination is a bitter pill that we have to swallow,” he said.
Dr. Chijioke Ekechukwu, an economist, said that while planning to eliminate the oil subsidy, the government must ensure that local refineries are operating optimally.
Ekechukwu said it would allow the country not to depend on the volatility of international oil prices.
According to him, from an economic point of view, the subsidy should not have existed at all.
“Granted, the lack of subsidy would have brought more hardship to Nigerian citizens and likely led to a high cost of living, but that would have made us rush solutions and remedies at such high costs,” he noted.
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