Politics
Economist Advises Caution On Subsidy Removal, Warns Of Monopoly Risks
Economist Advises Caution On Subsidy Removal, Warns Of Monopoly Risks....KINDLY READ THE FULL STORY HERE▶
Economist and public affairs analyst, Dr. Samson Simon, has urged the Federal Government to resist calls for the complete removal of the petrol subsidy…….CONTINUE READING
Dr. Simon, who serves as the Chief Economist at Economics & Data Limited, was responding to comments made by Aliko Dangote, Chairman of Dangote Group, in an interview with Bloomberg TV, where Dangote advocated for the total removal of the subsidy. However, Dr. Simon argued that such a move would be premature given Nigeria’s insufficient local refining capacity.
In an exclusive interview with DAILY POST, Dr. Simon stated, “On paper, the removal of subsidies seems ideal as it frees up resources for critical state needs such as education, healthcare, and infrastructure. However, our past attempts at subsidy removal have failed, causing significant hardship for Nigerians while still costing the government more in subsidies. This indicates deeper issues.”
He emphasized the importance of domestic refining and cautioned against creating a monopoly in the market, noting, “We need to ensure domestic refining and supply of feedstock to these refineries. This should not be limited to Dangote, as he is a businessman focused on profit. A monopoly, especially in essential goods like fuel, could be harmful to Nigerians.”
Dr. Simon also highlighted the risks of allowing monopolies to dominate, drawing parallels with the cement industry. “Even though Dangote is not the only cement manufacturer, he controls more than 60% of the market, creating a de facto monopoly. This dominance has not translated to lower prices, which is why Nigerians are feeling the impact.”
He continued, “Now is not the right time for complete subsidy removal. While Dangote’s efforts should be encouraged, allowing him to dominate could lead to widespread suffering. We need competition to ensure fair prices.”
Dr. Simon concluded by suggesting a strategy to reduce fuel prices without relying on subsidies: “We should focus on domestic feedstock and refining, not just for Dangote but for the entire Nigerian oil industry. This approach would help address the core issues and potentially lower fuel prices without the need for subsidies.”
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