Effects Of Fuel Subsidy Removal - LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has listed some of the adverse effects of the Federal Government’s recent policy to deregulate the nation’s downstream oil sector.

LCCI, in a statement, said the policy has led to fresh inflationary pressures resulting from sharp increases in transportation cost, high inflationary expectations across all sectors of the economy, and a devastating impact on the psyche of the common people as the new policy poses a serious risk to their survival.

LCCI said the policy would also lead to the sharp increases in operating costs of micro and small enterprises, many of which rely on small electricity generators powered by petrol.
LCCI said, if well implemented however, it is expected that the policy would benefit the economy and the citizens, in the medium to long term leading to an increased private investment in the downstream oil sector with a corresponding impact on the creation of quality jobs.

Other benefits, the body said, include reduction in the pressures on foreign reserves, a huge chunk of which is currently being used to fund fuel importation and a better fiscal space to ensure macroeconomic stability with a resultant positive effect on the economy.

The Chamber noted that options available to the government in the current circumstances are limited but stressed that in light of the prevalent poverty and high rate of unemployment in the country, government needs to demonstrate its sensitivity and concern to the plight of the ordinary Nigerians by focusing urgently on the acceleration of the delivery of palliatives to cushion the adverse outcomes of the subsidy removal.

LCCI said in order to provide the moral basis to demand sacrifices from citizens, the political leadership and bureaucrats should demonstrate visible fiscal prudence.

“The governance structure should be more cost-effective and corruption must be more effectively tackled saying that government must sustain the momentum of dialogue and enlightenment to stabilise the polity and ensure accountability and transparency in the use of the savings from this policy decision for the benefit of the people as promised.

LCCI urged stakeholders to cooperate with the Subsidy Reinvestment Board to make this happen.

“The promise made by government on this matter is a covenant that should be respected. Government must fast track the turnaround maintenance of the refineries and encourage the building of new ones to reduce dependence on importation of refined products and protect the economy from the volatility of global oil prices,” it said.

According to the body, government must ensure an effective regulatory framework to protect the citizens from exploitation by petroleum products marketers and ensure quality assurance and accelerate implementation of power sector improvement programmes to reduce reliance on petroleum products as principal sources of energy in the economy.

“LCCI wishes to appeal to all Nigerians to ensure that all forms of agitations protests against this policy are conducted in the most peaceful manner. In the same vein, we urge the law enforcement agencies to manage the current situation with utmost professionalism to avoid the escalation of the current crisis.

“The collapse of law and order will not serve any useful purpose. If anything, it would worsen the predicament of all, including the common people of this country,” the chamber added.