The Group Managing Director of Afrinvest West Africa Limited, Ike Chioke has said that it is sacrilegious for the Buhari-led Federal government “to have blown up to 1.6 trillion naira on petrol subsidy” when there is little money left to invest in critical areas such as health and education.

The Afrinvest boss spoke at the company’s Nigerian banking sector report pre-launch press conference in Lagos on Tuesday.

The report is titled: “An economic agenda for a new government”.

Subsidy on petrol is no longer officially part of the budget.  But the federal government is now the sole importer of petrol because other independent marketers cannot afford to import the product to sell at a price set by the government.

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But it now appears that the government is spending far more than it did before the subsidy was officially knocked off the budget.

In 2017, the federal government spent about 750 billion naira on importing fuel. This year alone, the government has spent about 2.4 billion naira every day, amounting to about 1.6 trillion naira even before the year comes to an end.

Mr. Chioke said: “It is sacrilege to blow up 1.6 trillion naira on petrol. Fuel subsidy is a subsidy on consumption. I would rather have a way to do subsidy on production.

“This is because if you can subsidize productive activity, then we are then focusing on things that create value in the country and employ people. But the subsidy is on consumption for a product which we don’t even manufacture ourselves.”

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Speaking further, he said: “If you look at what the fuel subsidy has done, it has created a huge moral hazard of dependency in a country where we have crude oil. Because of fuel subsidy, we now have no interest in having any efficient refineries. Imagine if we had refineries.

“For refineries to work, you need to remove the fuel subsidies so that they can price the product at a market level. Now, we can’t fix our refineries, we are now taking our little cash, which is foreign exchange, to import petroleum products from foreign countries.

"It’s sad because I do have some data that suggests that some Nigerians have refineries outside of Nigeria and they are the ones selling the petroleum products to us and collecting the foreign exchange. So, it’s a huge moral hazard.”

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