Subsidy removal will support fiscal viability of Nigeria, says Peterside
Category: Oil Sector
January 10, 2012
Atedo Peterside, chairman Stanbic IBTC Bank says the removal of petrol subsidy is a requirement for the fiscal viability of Nigeria and that the measure also helps to democratise the allocation of resources in the country.
Peterside, who is also a member of government’s economic management team, told Business Day yesterday, that while he has nothing against subsidy as a concept, he believes that states and local governments should be allowed to determine how best to allocate their resources.
What the removal of subsidy ensures, he says, is to force the federal government and its agencies to stop administering the resource which does not belong to it in the first place, and allows each state and local government to get its rightful share, and if it chooses, design a subsidy programme for its own people.
The states in Nigeria stand to receive about N411 billion in savings from the subsidy removal, while local governments across the country will collectively receive about N203 billion as their share from savings from the abrogation of the petrol subsidy regime. About N478 billion will accrue to the federal government.
Peterside said: “The level of ignorance in this country is amazingly high. Of the N203 bn additional revenue which will accrue to the LGAs on account of the removal of subsidy, Kano state LGAs alone will get the highest of N11.7 billion.
“So, instead of the people of Kano demanding for their N11.7 bn for their LGAs, they are abusing Central Bank Governor, SanusiLamidoSanusi, for arguing to bring them an extra N11.7 bn, an amount which would otherwise have been consumed largely in Lagos and neighbouring countries.”
Speaking earlier on a Channels Television programme, Peterside dismissed the notion that Nigeria was rich and could afford such a hefty annual subsidy bill.
He said :”We are not a rich country. We are a poor country. The poorest state in Nigeria is Jigawa state. Ninety five per cent of the people in Jigawa state are poor. Jigawa deserves its own share. From my own little analysis, Jigawa and its local governments should be getting about N14 billion of that money annually transferred to them. So the question should be, does Jigawa state, the poorest in Nigeria where 95 percent are poor, does Jigawa state have a right in 2012 to receive an extra N14 billion which rightfully belongs to them, but which historically has been spent on the rich, say Lagos, and also diverted to neighbouring countries? So, this is also about equity. The poorest state, as I said earlier, is Jigawa, the second poorest state is Kebbi. In Kebbi, 89 per cent of the people there are poor. And I can go on and on. In Bauchi, about 86 per cent of the people are poor. I can go on and on.”
Of the total N411.03 bn accruing to the 36 states, ten states have emerged as the highest beneficiaries. The ten are led by Rivers with N44.6 bn, Akwa Ibom with N43.4 bn, Delta N40.9 bn, Bayelsa N33.8 bn, Ondo N12.5 bn, Kano N11.2 bn, Lagos N10.1 bn, Edo N9.4 bn, Kaduna N8.9 bn and Imo N8.7 bn. Ebonyi state will get the least - N5.8 bn per annum, at 2011 rate of subsidy and this figure excludes the sum that will accrue to local governments in these states.