Ademola Adigun, CEO of AHA Consultancies, an advisory agency specializing in oil and gas governance reforms, has faulted the notion that the Federal Government’s removal of fuel subsidies automatically translates into financial savings for the government.
Mr. Adigun in a recent appearance on TVC’s ‘Business Nigeria‘ monitored by Arbiterz stated that contrary to public perception, the removal of subsidy does not necessarily mean the government has been able to save from subsidy removal.
He said “…There is the argument of the government saying they have saved $ 20 billion from subsidy removal and people are asking where the money was and if they have saved the money why are they borrowing money.
“I do not blame anybody saying that because in people’s minds savings mean what you have kept aside.
“One of the things I have said in my previous engagements with the government when they were advocating for the removal of subsidy was do not tell Nigerians you have saved money because there is no money to save.
Clarifying the concept of savings he said “Saving money means I planned and I have N1o to spend but spent N5, which means I have saved N5.
“(In this case), You did not have N10 but you did not spend N5, you have not saved money but what you have done is cut waste.
“So when government use the language of savings saying we have saved $20bn from subsidy removal, Nigerians have the right to ask where is the money.
“Well you have not saved money because you never had the money in the first place.” He concluded.
State of Subsidy removal
Speaking on the state of the subsidy removal in Nigeria, Mr. Ademola noted the reason why subsidy removal was allocated for was because the government was borrowing money to subsidize fuel.
He noted “There was no N10 before but they were spending N5 borrowed to keep Fuel low.
“What happens now is that you are no longer spending the money to keep fuel prices low” He concluded.
Adigun reiterated that as far as there is an attempt at price regulation of petroleum products, there would always be subsidy which in itself is not wrong.
He however noted that the problem arises when government subsidies only benefit a small segment of the population.
Government Poor Communication
Adigun also criticized the government’s poor communication strategy regarding its economic reforms, particularly on subsidy removal. He argued that ineffective messaging has created a vacuum filled with public speculation.
“The government’s inability to clearly articulate its policies has left citizens uncertain and skeptical, fueling opposition to these necessary changes,” he concluded.
