Letting markets determine the pump price of petrol in Nigeria would push it up to about N248-250 per litre from N145 per litre and it will oscillate with forces of demand and supply, but it will save Nigeria about N1.7 trillion in subsidies in 2019 alone.
We should understand that in 2019 Nigeria will spend at least $5.5bn on PMS subsidy and it can rise to $7bn depending on the international price of crude oil in 2019.
The benefit of Subsidy removal is humongous and can't be quantified.
PMS subsidy removal will bring about a significant reduction in the government’s borrowing and save the country at least N1.7trillion in 2019.
If we retain Subsidy, the Federal Government would borrow heavily to fund subsidy and recurrent budget in 2019 and the years to come.
In 2018 Nigeria borrowed N2.66 trillion to finance the deficit in the budget. In 2019, we will be forced to borrow at least N3 trillion which is more than the total of our capital budget and 34% of 2019 budget.
The price of premium motor spirit, PMS or petrol in the country is currently not determined by the forces of demand and supply.
The current landing cost of PMS is about N227 per litre with additional N11.72 for marketer taking it to N239/ litre meaning we would be paying as much as N94 /liter over 52.3 million litre per day that is N4.92 billion Nigerian Naira per day.
Letting markets determine the pump price of petrol in Nigeria would push it up to about N248-250 per litre from N145 per litre and it will oscillate with forces of demand and supply, but it will save Nigeria about N1.7 trillion in subsidies in 2019 alone.
It is not healthy that we should be borrowing money for capital and recurrent expenditure when we can get the same money via subsidy removal.
The major issue is the lack of trust with those who manage our affairs.
Solutions
We can create an independent committee which must NOT be headed by any Member of the ruling Party APC.
The savings must be used in a way that every Nigerian can monitor and assess for themselves directly the way the government is utilizing the funds saved from fuel subsidy removal.
This committee will be saddled with the powers to demonstrate to Nigerians that the savings from the subsidy removal will be used for the benefits of all Nigerians and for the intended purposes alone.
This committee will oversee the fund and the program. Instead of Nigerians asking the president, this committee will tell Nigerians what the funds are being used for and how the program is being run.
As at today, Nigerians spends at least $2.4billion on self-provision of drinking water that is just 1 nos. 50cL sachet water per day. Which is far from it, in reality, we spend at least $4.7billion on self-provision of water.
As at today, Nigerians spend at least $1.1billion on health tourism and another $1billion on patronizing moribund hospital locally.
As at today, Nigerians spend at least $11.5billion on self-provision of Electricity.
As at today, Nigerians spend at least $2bn on foreign education and another $1bn on education locally because public schools are as good as dead.
For how long will we continue to suffer?
When we can invest the entire subsidy in Health, Power, Water, Education and other infrastructural projects.
Stopping subsidy and investing the funds right will give Nigeria the right direction in less than 10yrs.
We can decide to keep paying subsidy but we must NEVER complain that we are incurring debt.