President Seeks To Cut Fuel Subsidies After Oil Decline

President Goodluck Jonathan has proposed to cut fuel subsidies in half in a bid to reduce spending after a retreat in global crude prices. According to David Mark, the Senate President, the government plans to reduce fuel subsidies next year to N458.6 billion ($2.6 billion) from N971.1 billion , citing a revised 2015 Medium Term Expenditure Framework and Fiscal Strategy Paper submitted by President Jonathan. The global collapse in oil prices is biting into Nigeria’s income, 70 percent of which comes from crude exports. Finance Minister Ngozi Okonjo-Iweala plans to cut expenditure by 6 percent next year and lower the budgeted benchmark oil price to $73 per barrel, from $77.5 this year. Kerosene subsidies will also be cut to N156 billion, from N250 billion, according to the proposal. Source: http://businessdayonline.com/2014/11/president-seeks-to-cut-fuel-subsidies-after-oil-decline

But Diran Fawibe, the chairman and chief operation officer of International Energy Services, said that the move by President Goodluck Jonathan to cut the amount to be spent on subsidy is a step in the right direction.He however fears that the labour unions and civil society groups may not allow Jonathan to implement the policy, especially in an election year. He urged the president to carry the union members and civil society groups along. He said there would be no point for the president to move such an idea without being able to carry it out, adding that the cost of fuel subsidy would continue to balloon, since the country has no functional refineries . The Dangote Refinery which is the most viable one in sight, he said, would not come on stream until 2018. Spending N458.6 billion on fuel subsidy according to him ,is still a lot of money and it would amount to creating jobs for indigenes of other countries .