The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has said that the only way Nigeria economy can improve is for the incoming administration to remove fuel subsidy.
Speaking at the National Executive Council, NEC, meeting of the Association, PENGASSAN President, Comrade Festus Osifo, said removing subsidy will also facilitate the growth of the downstream sector of the oil and gas industry.
Osifo said the failure of the current administration to remove has adversely affected the cost of living and the economy at large.
He noted that subsidy has shrunk the country’s dollar reserve and further frustrated the exchange market.
The association president insisted that While removal of subsidy would help the country save more and speed up infrastructural development across the country.
He said, “And in the last seven years, we have actually maintained that stand. We have maintained our stance not minding some of the side effects. But again, if you look at these subsidy attacks we tend to be trying to hold on to something why we are losing in some other areas.
“If you look at the cost of living, it has gone up drastically, by over and over, three times in the last two, or three years. If you look at the drivers of why the cost of living has actually moved to where it is today, it is actually because of the fact that our exchange rate has plummeted. Before now, our exchange rate used to be somewhere around 100 plus Naira to $1. But, today, it’s around 800. It even moved beyond it to 800 sometime last year.
“So, now, why is this exchange moving up? Because we are not earning foreign exchange. Oil and gas is where we earn about 80 to 90% of our foreign exchange. But, at the end of the day, this money is now being used for a subsidy, and importing PMS and when you now import this PMS what will now happen in return you will sell in Naira? So, that has a shrinking dollar reserve and because our dollar reserve has shrunk to the level it is today.
“That is actually why our exchange rate has plummeted. If we address this problem, if we look at domestic refining, and we also look at the issues bothering subsidy, if we address this, Nigerian and the Nigerian government will earn more money from the crude oil and that money will go into CBN; it will shore up our reserves and it will support lots of other imports and reduce the pressure in USD.”
