Fuel subsidy removal

The Federal Government is well advised to walk away from its determination to remove fuel subsidy. There are ominous indications that the removal of fuel subsidy will provoke labour upheaval the consequences of which no one can predict.To avoid the catastrophe that might follow the removal, there are two options open to the Federal Government.The first one is for the government to go into partnership with private investors to build more refineries all across the country, that always produce more than sufficient quantities for domestic consumption.The second option is for the country to revalue the naira/kobo currency to the level of one naira exchanging for one US dollar, the price at which the global price of petroleum products are quoted in the international market.The building of sufficient refineries across the country will not automatically solve the question of fuel subsidy. The producers of crude oil in the country must be mandated to supply the local refineries with certain percentage of their output at the cost of their production plus 15 to 20 per cent margin for their profit. Correspondingly, the refineries must also be mandated to supply refined products to the countrys local marketers at a cost to them plus 15 to 20 per cent margin for their profit.With deregulation, the Petroleum Price Equalisation Fund set up in the seventies (70s) will be gone. The fund was set up to enable petroleum marketers in the country to sell their products the same price all over the country. Because the fund takes care of the additional costs of transport to the hinterlands or up-country.Therefore, the authorities must re-activate their storage distribution depots across the country so as to enable them to make continuous supply to consumers in their up-country areas. This will cut off the cost of bridging fuel from far away distance to incur additional transport cost which the marketers perforce will add to their pump price.If the above suggestions are accepted, probably our oil marketers will be able to sell a litre of petrol for about N20.00. The refineries should be allowed to sell their overflow production through export.The second option open to the Federal Government to avoid the painful aftermath of fuel subsidy removal is to revalue the Nigerian currency (Naira/Kobo) to a level at which the naira will exchange one naira for one US dollar. The effect of such revaluation of the naira will likely bring the price of one litre of petrol to about ninety kobo (N0.90).After all, Ghana revalued its currency recently.L.A. Akindayomi, 5, Ibezim Obiajulu Street, Surulere, Lagos.
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