Economist, Dr. Samson Simon Advises FG Against Full Removal of Fuel Subsidy, Says It's Premature Without Domestic Refining

By: Abdulwasiu Akintunde 

An economist and public affairs analyst, Dr. Samson Simon, has advised the Federal Government against the complete removal of fuel subsidies, despite recent calls for such action from business magnate, Aliko Dangote.

Reacting to Dangote’s remarks during an interview with Bloomberg TV, where the Chairman of Dangote Group advocated for the total removal of fuel subsidies, Simon argued that doing so now would be ill-advised due to the country's insufficient local refining capacity.

OPEN TELEVISION NAIJA (OTN) News gathered that in an exclusive interview with "Newspot", Simon explained that while the removal of subsidies might seem ideal in theory, freeing up resources for critical sectors like education, healthcare, and infrastructure, past attempts have failed and have caused significant hardship for Nigerians. 

Furthermore, he noted that despite price hikes at the fuel pumps, the Government continues to spend heavily on subsidies, indicating deeper systemic issues.

"The real problem is our lack of domestic refining, Before we even consider subsidy removal, we need to focus on increasing local refining capacity and ensuring a stable supply of feedstock to refineries."

"And this shouldn't be limited to Dangote alone. While his efforts should be applauded, relying on a single entity could lead to a dangerous monopoly," Simon pointed out.

Simon cautioned that allowing Dangote to dominate the refining industry, much like his current control of the cement market, could have negative consequences for Nigerians. 

He warned that monopoly power, even without being the sole supplier, can drive up prices and reduce competition.

In addition, He further emphasized the importance of competition in the fuel market, stating, "Domestic refining alone won't necessarily lower prices unless there's genuine competition. As we've seen with cement, dominance in a market often leads to higher-than-average prices."

OTN News reports that Simon added that while subsidy removal is necessary, it must be done strategically, with a focus on lowering fuel prices without relying on subsidies. 

He proposed a solution based on increasing domestic refining and feedstock supply across the entire oil industry, not just for Dangote, as a way to address the underlying issues.

In his view, this approach would bring about the desired outcomes of lower fuel prices and reduced subsidy costs, without placing the burden on Nigerian consumers.