Eliminating fuel subsidy creates savings that can be spent on palliatives and Human Development Index goals. It is unsustainable for the government to continue to borrow money to finance subsidies. These borrowed funds can be channeled toward infrastructural projects, healthcare, education, and other value-adding projects.
Subsidies for public transportation: The government can provide incentives for public transportation to help reduce the cost of transportation for deserving commuters. This can be achieved by providing targeted subsidies to public transportation operators, or by reducing taxes and levies on public transportation.
Education: One common palliative measure in education is the provision of student loans, scholarships, and bursaries. In addition, the use of technology can also be a palliative measure in education.
Infrastructure development: The government can invest in the development of infrastructure, such as roads and railways, to reduce the cost of transportation and make it more efficient.
Incentives for renewable energy: The government can provide incentives for the development and use of renewable energy sources, such as solar and wind power. Encourage the use of gas as a transition fuel and deepening its usage as a viable and sustainable energy source.
Support for local industries: The government can provide support for local industries to help them cope with the increase in fuel prices. This can be achieved by providing subsidies for raw materials, or by reducing taxes and levies on local manufacturers.
National economic growth: The full implementation of deregulation and beneficiation of the country’s hydrocarbon resources will make the petroleum downstream industry contribute fully to national economic growth instead of the financial burden it currently is to the Nigerian state.
Professionalization and optimization: Whilst some argue that it will lead to the professionalization and sustainability of the industry, and bring about perfect competition, others are concerned about the risks of state capture, malpractices, cartels, and monopolistic behavior.
One of the key benefits of perfect competition is competitive pricing. This ensures that customers get the best value for their money. Perfect competition encourages continuing innovation and optimization. Businesses are incentivized to invest in efficiency and develop newer and better products and services to stay ahead of their competitors.
In line with the Petroleum Industry Act 2021, in-country refining should be privileged. With any product shortfall, industry experts recommend a transparent, competitive, and periodic supply tender for product, supervised by The Authority. Additionally, a level playing field is necessary, with access to country logistics (open access) and FOREX (a ring-fenced fund accessible by all eligible market operators). Policies should also be in place to cushion price and supply volatility, including robust onshore and floating strategic stock management.
Sustainable development practices and enforcement of regulations are also necessary. HSSEQ, training/retraining, and local stakeholders’ management should be a priority. Periodic reviews of regulations and guidelines are also required to keep pace with international best practices. Strong regulators and active consumer protection are required to guard against imperfect competition.
Finally, managing social change through effective public and stakeholder engagement is vital to the successful implementation of deregulation.