Federal Government DID NOT Remove Petrol Subsidy - Shittu Ahmed

THE FEDERAL GOVERNMENT DID NOT REMOVE SUBSIDY BECAUSE THERE WAS NO SUBSIDY AT N86.5 PUMP PRICE OF FUEL

Before you go to protest against the removal of fuel subsidy by the Federal Government, be informed that the government did not remove any subsidy because there was no subsidy to be removed in the first place. So don't go and protest against what does not exist.  Seek information and be informed.

 This is what the government has done. The government has simply stopped giving foreign exchange to fuel importers and has asked them to source for foreign exchange through secondary sources.  

Why has the pump price of fuel increased from #86.5 to between #135 and #145? This is specifically as a result of the difference between the official exchange rate and the informal (parallel) market exchange rate. This is the simple mathematics.  The official exchange rate is N199 per dollar while the parallel market exchange rate is N320 per dollar.  This represents an increase of 37% (320-199/320 × 100 = 37.8%). This reflected exactly in the new price of petrol as it increased from #86.5 to an average of #140 which is an increase of 38% (140 - 86.5/140 ×100 = 38%).

There may be a gap in the dissemination of information to the public and it is totally regrettable and I am sure it will be taken care of, but I encourage Nigerians to seek the right information.  I have always insisted that there was nothing like fuel subsidy and I stand by that. The Federal government cannot continue to be the sole source of foreign exchange for the importation of fuel in the face of falling price of crude resulting in the depletion of our foreign reserve. It is unsustainable and cannot satisfy the domestic consumption of fuel in Nigeria.

Nigeria gets foreign currency from the sale of crude and the price of crude has fallen by over 70%. This means that the government no longer has enough dollars to give to fuel importers.  A lay man should be able to understand this. With the competition that will set in from the open market, it is expected that the pump price of fuel will naturally crash with time. Please share and enlighten every Nigerian.

And also, this goes to our media men, they should learn to seek for professional terms in finance and economics to be used in their news report before bombarding Nigerians with their news. There was nothing like SUBSIDY this year because there was no provision for it in the budget.  

Note: If you are not satisfied based on the above analysis then I challenge you to an open debate.                          

Shittu Ahmed  (a.k.a. Ambassador SIA, International Finance Analyst).                                               Contact: 07034592651, 08079529090.

E-mail: sia_oousug@yahoo.com