Economist Muda Yusuf has voiced concerns over the “dramatisation” of petrol prices involving the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL).
While speaking during an interview with Channels Television’s, ‘The Morning Brief’, Yusuf highlighted how this spectacle could deter potential investors and distort public perception of the newly available option.
“I’m worried about the dramatisation of the cost the NNPCL is buying from Dangote. Coming to the public space to exchange the things we’re hearing. I don’t think it’s good for the economy, it’s not good for our perception and it’s not good for investors’ confidence,” Yusuf remarked.
Further addressing the broader issue of fuel subsidy removal, Yusuf, who is also the Managing Director of the Centre for the Promotion of Private Enterprise (CPPE), cautioned that Nigeria isn’t yet in a position to completely walk away from the subsidy problem due to the inadequate social safety nets available to the most vulnerable.
He noted that despite President Bola Tinubu’s statement on May 29, 2023, declaring the end of the fuel subsidy, the NNPCL has continued to bear the burden of the cost differentials linked to imported petroleum products.
“We cannot walk away so quickly from this problem of subsidy otherwise it would make life extremely difficult. Things are already very difficult. Up until now, the NNPCL was subsidising although progressively the level of subsidy is being reduced which is fine, but to talk of a complete deregulation of the whole system in an economy without a social safety net will not be appropriate at all,” Yusuf explained.
He pointed out that citizens are already stretched to their limits economically, and the recent hike in petrol prices has only intensified this strain.
“The economy is about human beings and we need to recognise that because we are driving the citizens almost to their limits,” he emphasized.
Yusuf also stressed that total deregulation isn’t feasible for a country like Nigeria, where safety nets for the population are lacking. To alleviate some of the pressure, he suggested that the government focus on reducing reliance on imports by encouraging import substitution across various sectors.
“If we’re able to move that pressure away, it will have a significant impact on the exchange rate. If progressively we can look inward and reduce import we’ll be making progress,” he added.