The Managing Director, 11 Plc, formerly Mobil Plc, Tunji Oyebanji, said diversion of funds meant to create jobs into subsidy payments has fueled unemployment in the country.
He said the rate of joblessness in the country could have dropped if funds expended on subsidy payments were channeled into productive sectors to generate employment opportunities for the nation’s teeming youths.
Oyebanji stated this at the yearly dinner of the Institute of Change Management (ICM) tagged “Impact of insecurity and oil subsidy on Nigeria’s economy” in Lagos.
Huge funds have gone into oil subsidy in the past 10 years without value to the citizens, fueling criticism of the policy.
Subsidies is the use of government funds to pay for the difference in the price of gasoline for consumers and the international price.
The policy was first introduced in Nigeria in the 1970s as a response to the oil price shock in 1973. Nigeria has undergone numerous attempts at reform but the country has never successfully removed gasoline subsidies, in large part due to strong popular opposition to reform.
Oil subsidy payments have grown by 349.42 percent from N350 billion in 2019 to N450 billion in 2020 and N1.573 trillion in 2021. The parliaments approved N4 trillion for subsidy in 2022 although the Nigerian National Petroleum Corporation, (NNPC) said the amount was far above what was arrived at.
Owing to the huge funds being consumed by the policy, Oyebanji said there has been constant advocacy to fully liberalise the sector as subsidy is the big elephant in the room.
He said government decision to postpone the policy for some months has inevitably gotten us to where we are currently.
“We have no choice because today we are bleeding. The subsidy money is taking away money that we should have been using for investments in growing the economy and creating jobs for people. So it is inevitable that we get here.
” Our borrowing is also going through the roof. So if we do not stop or completely disengage from this subsidy payments I am afraid it will hamper the growth and development of Nigeria’s economy into the future. So we really need to deal with it decisively once and for all.”
On the current fuel scarcity, the Managing Director said operators in the oil and gas industry have always advocated for complete deregulation of the industry to create a level playing field for many suppliers of petroleum products into the country, adding that any market where there is a single supplier of a commodity, there is bound to scarcity.
“Today there is only one supplier in the industry which is NNPC. This is not an ideal situation. Any market where there is a single supplier will always experience hiccups along the line. So the fundamental solution or the basic solution to the problem is to free up the market and allow people to be involved in the potential distribution of the product. So if Mr. A does not have, Mr. B will have”.
He also spoke of logistics challenges like the recent floods across the country that also contributed to the fuel scarcity crisis causing a lot of panic buying.
He, however, stated that all hands must be on deck to normalize the situation which he hoped would be addressed in no distant time.
“The quantity of petroleum products available is one thing while the other thing is where is the fuel? If you have a lot of petroleum products, but it is on the high seas and not in the tank farms or depots and in the tanks in the petrol stations, then you will have a problem. So, I think the issue is not so much the quantity of product that may be available offshore, but what is rarely available in everybody’s tank and in the petrol station.
“So, why we are all working hard now is to work on the logistics to make it easier and quicker for products to get into our tanks or the depots, and by extension delivered to the petrol stations, so, sometimes when you hear about the figures or the stock that is available, it may be stock that is available for maybe on the high seas,”
“So everybody is now working hard to make sure that what we have on the high seas gets to our tanks and distributed to the service stations.
The current fuel scarcity has caused the price of the Premium Motor Spirit (PMS), to go up, varying from one locations to another.
Some sell for ₦260 per litre in some parts of Ogun state and as much as ₦₦350 per litre at black market.
Across Lagos metropolis, it is sold from ₦220 to ₦280 in some filling stations while it is sold at black market for as much as ₦400 per litre.
Again, the same product is sold at Onitsha for ₦800 per litre, and also in Abuja as well.
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