'Scrapping subsidies on fuel is good for an economy' – NPA

Why is Nigeria scrapping subsidies on fuel?, Tasunti quizzes

Scrapping subsidies not sustainable, NPA

NPA cannot say no to subsidies, Tasunti explains

The Head of Economic Regulation at the National Petroleum Authority, National Petroleum Authority, Abass Ibrahim Tasunti, has said that government needs to assess its ability to subsidize the prices of petroleum products before it makes the decision.

He noted that subsidies are not entirely the best choice to make.

He made the statement while making a presentation on the Price Formula in Ghana during a day’s capacity-building training for Journalists in the Northern region.

“Subsidy in itself is not really a good thing. But because you the consumer you’re only interested in the cheaper prices, you forget that if the price is cheaper and the product is not available, you will not like that.”

He continued, “for us if the government wants to subsidize, the NPA as a regulator cannot say it would not allow the subsidy to go on. But it is for the government to analyze or assess its capacity to subsidize. However, you must have the money before you can subsidize so that we don’t go back to the issue where you have to subsidize, but there’s no money and there’s a shortage”.

He also intimated that what the NPA can do is advise government to use the Price Stabilisation and Recovery Levy to cushion consumers.

Tasunti also noted that most countries including Nigeria as an OPEC country decided to scrap its subsidies on fuel .

“Why is Nigeria scraping subsidy on fuel? Most countries in the world want to scrap subsidies on fuel – it is not an easy decision to scrap subsidies on fuel, but it is very good for an economy. About 70% of vehicles in Nigeria run on petrol; in Ghana we consume more diesel than petrol, but in Nigeria it is the other way round because everybody is using the fuel that is subsidized.”

“However, because Nigeria produces a lot more crude oil than Ghana does, that is why they’re able to use the revenue they generate from the crude oil export to subsidise the petrol prices for consumers. And even that they say they want to scrap the subsidy because they aren’t able to afford the subsidy” he explained.