Analysts wary of halving of fuel subsidy

Nigeria fuel subsidy

Nigeria fuel subsidy

from OKORO CHINEDU in Lagos, Nigeria
LAGOS – ANALYSTS raised concern over whether the estimated savings from the reduced oil subsidy would be used fairly.

According to international global think-tank, Rand and Merchant Bank, the possible halving of the fuel subsidy in 2015 reflects the government’s efforts to adjust to a substantially lower oil price.

The proposal forms part of the state’s revised budget which is pending constitutional approval. It is believed that this measure will assist in closing the gap between recurrent and capital expenditure; encourage
foreign investment in downstream infrastructure; enhance local refinery production and gradually reduce the importation of refined products.

“However, there is widespread concern over whether the estimated savings will be used judiciously.

“Despite its theoretical benefits, President Goodluck’s past endeavours to repeal the fuel subsidy have been less than successful, resulting in widespread social unrest as it is perceived as an indirect form of wealth redistribution to the poor,” RMB stated in its latest global markers report.

“The onus is therefore on government to demonstrate that it has effectively managed the proceeds of the last subsidy removal through the Subsidy Reinvestment and Empowerment Programme (SURE-P) and is in a position to combat the effects of higher inflation and unemployment.”

– CAJ News







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Posted by on Nov 24 2014. Filed under Finance, Finance & Banking, Oil & Gas. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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