Like US And Canada, FG Could Have Explored Subsidy On Fuel Production – Kpakol

The former chief economic adviser's remarks came on the heels of the Federal Government’s proposal to transfer N8,000 to 12 million poor households in the country.


An oil rig

 

Prof Magnus Kpakol on Friday expressed support for subsidy on fuel production as opposed to consumption, citing Canada and the United States as economies implementing similar policies.

Kpakol’s remarks came on the heels of the Federal Government’s proposal to transfer N8,000 to 12 million poor households in the country, as part of its efforts to mitigate the economic pains brought on by the removal of fuel subsidy.

The six-month palliative plan was contained in a letter President Bola Tinubu wrote to the House of Representatives regarding an $800 million World Bank loan request of the former President Muhammadu Buhari administration for the social safety net programme.

This came barely a month after President Bola Tinubu declared in his inaugural speech that “fuel subsidy is gone” which was soon followed by assurances to millions of Nigerians.

Kpakol, who made a virtual appearance on Channels Television’s Politics Today, acknowledged the Tinubu administration for “trying” to end the subsidy regime, but highlighted the uphill battle.

“I admit we did not need the kind of fuel subsidy that we were getting. Even in Canada, where I am now, over 11 years ago, they made away with their own fuel subsidy programmes, although they still subsidise fossil fuels, but at the production level,” he said.

“So, in many countries, even the United States, there’s a subsidy at the production level, not so much at the consumption level. So, I understand that.

“But it is not easy for the (Tinubu) administration to tackle this problem, and then try to say they’ve left something that they could have done on the table. They are facing a very difficult situation and they’re attempting to try and resolve that by doing what they have done.”

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A Reuters report published in March noted that calculating the cost of U.S. subsidies for the fossil fuel industry is complex because the incentives stretch across the U.S. tax code, but it added that estimates range from $10 to $50 billion per year.

In another report Friday, The Canadian Press indicated that Canada is set to fulfil a 14-year-old promise by G20 countries to wean fossil-fuel companies off of government subsidies that encouraged “wasteful” consumption and undermined efforts to slow climate change.

Canadian Environment Minister Steven Guilbeault also said new policy guidelines were underway dictating the circumstances under which future federal investments could still flow to Canadian oil and gas firms.