By Udeme Clement
The Minister of Transport, Senator Idris Umar, has said that the removal of fuel subsidy will accelerate the growth of the nation’s shipping sector to improve on revenue generation and greater productivity.
He made this known while addressing participants at the one-day seminar on Removal of Fuel Subsidy and Impact on the Maritime Industry, organised by the Maritime Reporters Association of Nigeria (MARAN) in Lagos recently.
Umar listed other benefits of the fuel subsidy removal include, better opportunities to address fundamental issues such as substantial loss of revenue and favourable terms of trade such as Cost-Insurance-and-Frieght (CIF) in preference to Free-on-Board (FOB), smuggling of fuel will become unattractive in a deregulated regime, challenges of piracy, armed robbery at sea will be reduced to the barest minimum as factors that encourage these vices will substantially reduce, elimination of fraud and incidences of round-tripping associated with importation of petroleum products.
He said, “Indigenous capacity will also be enhanced through effective implementation of the Cabotage Act and there will be acceleration of economic development through investment in critical infrastructure such as Port Development and construction of Inland Container Depots (ICDs). Non removal of subsidy has discouraged competition and stifled private investment. Due to lack of deregulation, investors had shied away from investments not only in the Oil and Gas industry but also in the Maritime Sector”.
He added, “The current Transformation Agenda of President Goodluck Jonathan has seen the need to open up the sector for wider private sector participation to allow inflow of Foreign Direct Investments (FDI), which will have many positive implications for the economy. The issue of Petroleum Subsidy is familiar to Nigerians.
Over the years, subsidy on Petroleum Products (Diesel, Petroleum and Kerosene) have been subjected to progressive reduction as a matter of socio-economic necessity, whereby the price of Diesel (AGO) is completely regulated to zero subsidy level. He said the much talked about fuel subsidy is the amount paid by government to keep prices of fuel below free market price.”
His words: “The major beneficiaries of subsidy are the rich, middle class and some neighbouring countries where the products are smuggled oftentimes. It is imprudent to continue to retain fuel subsidy. I feel personally persuaded and convinced that the only option left for us as a nation is to follow the line of successful nations who had long deregulated and allowed market forces to determine prices of petroleum products”.