Fuel Subsidies, Others Costing FG N4trn – AAC Boss
The Executive Vice Chairman, Alpha African Advisory, Mr. Mustafa Chike-Obi, has said subsidies on fuel, foreign exchange and electricity are costing the Federal Government about N4 trillion. He said government must remove certain subsidies if it wants to raise the revenues that would enable it provide the needed infrastructure for double digit growth.
Chike-Obi spoke at an agenda-setting forum for Buhari’s second term organized by members of the Finance Correspondents Association of Nigeria (FICAN) in Lagos, yesterday. The former CEO of the Asset Management Corporation of Nigeria (AMCON), disclosed that rich Nigerians benefit more from fuel subsidy. He maintained that removing electricity subsidy would attract significant investments to the power sector and unlock other opportunities.
He said: “We have a stage 3 cancer as an economy and the biggest problem is maintaining three subsidies that add up to our total revenue.” He said the country is losing N1.6 trillion to forex subsidy by maintaining a N305 and N360 exchange rate window simultaneously. He said another N1.2 trillion is lost to fuel subsidy, without considering the fact that a concession rate of N325 is allowed for fuel importation.
“The electricity subsidy should be removed by allowing the power companies sell at whatever price they like because we have tried everything and we still don’t have power,” he said. Speaking on the theme, ‘Re-Positioning the Nigerian Economy for Sustainable Growth’, Chike-Obi expressed concern about Nigeria’s rising debt service ratio which, according to him, could be about 70 per cent. “It is almost a guarantee that Nigeria is going to be talking about debt rescheduling soon and we need to start putting our house in order ahead of that,” he said.
Chike-Obi stressed the need for coherent and forward-looking policies to address the myriad of problems confronting Nigeria. “We are badly in need of good leadership; we need a leader that would map out the strategy and road-map for economic growth in this country,” he said.