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A SPEECH DELIVERED BY HIS EXCELLENCY: DISTINGUISHED SENATOR WABARA, ADOLPHUS N., PH.D. AT THE 3RD EDITION OF FRONTIER DISCOURSE, AN ANNUAL PUBLIC LECTURE SERIES AND AWARD.

THEME: POST SUBSIDY ECONOMY EXPLORING BOLD INITIATIVES FOR ECONOMIC RECOVERY IN NIGERIA, ON 18TH NOVEMBER, 2023.

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Your Excellences, Distinguished guests, Ladies and gentlemen,

I stand before you today to address a matter of great importance, one that is central to the future prosperity of our nation – the transition to a post-subsidy economy and the exploration of bold initiatives for economic recovery in Nigeria.

For nearly two decades, the Nigerian government has literally been robbing Peter and handing the proceeds to Paul through a programme that has denied millions of poor Nigerians access to basic social amenities.

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That programme, the payment of subsidy on petrol was introduced in 2000 during the administration of President OlusegunObasanjo. At the time, Nigeria was experiencing supply challenges from its refineries in Port Harcourt, Warri and Kaduna. To get around the problem, the Obasanjo administration set up a committee to review pricing and distribution of petroleum products.

The committee in its recommendation advised President Obasanjo to set up a Petroleum Products Pricing Regulatory Committee (PPPRC). That committee later in 2003 become the Petroleum Products Pricing Regulatory Agency (PPPRA), which lasted till 2021 when it was scrapped by the Petroleum Industry Act (PIA) 2021.

Essentially, the subsidy on petroleum represented government’s attempt at reducing the cost of petrol bought by citizens through the provision of direct financial support to oil marketing companies to offset their cost of transporting petroleum products from loading points to their retail outlets.

In addition to this objective, the subsidy programme was supposed to stimulate economic growth whilst keeping the cost of petrol low for Nigerians.

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On the surface, the subsidy scheme was a laudable programme by government, but it would turn out not only to be a drain on government resources but more importantly, an avenue of further enriching a few wealthy Nigerians whilst making the poor poorer by denying them access to basie social amenities which government ought to have provided with the funds channeled toward the subsidy programme.

The amount spent on subsidy between 2005 and 2023 totaling over N21 trillion is a testament of colossal waste of public funds on a programme that has added little value to the lives of millions of Nigerians.

As we stand at the crossroads of economic transformation, it’s crucial to acknowledge that the decision to move away from subsidies is not just a policy shift; it is a fundamental reimagining of our economic landscape. Subsidies, while often well-intentioned, have imposed a significant burden on our national budget and hindered the growth of sectors that desperately need attention.

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The time has come for us to embrace a new paradigm, one that leverages our abundant resources, both human and natural, and charts a course towards sustainable economic recovery. Our journey toward a post-subsidy economy requires courage, innovation, and a commitment to forging a resilient future for our great nation.

First and foremost, I call for total deregulation of the downstream sector. Total deregulation promotes efficiency in the downstream sector. When market forces are allowed to set prices, it encourages competition among suppliers, leading to increased efficiency in production, distribution, and retailing of petroleum products. This efficiency, in turn, helps to eliminate the inefficiencies that often accompany government control, resulting in a more streamlined and cost-effective industry.

Furthermore, deregulation opens the door to increased private sector participation and investment. With a free market, entrepreneurs and investors are more likely to enter the downstream sector, bringing with them innovation, capital, and expertise. This influx of private investment can lead to the development of new technologies, improved infrastructure, and increased capacity, all of which contribute to the overall growth of the industry

Secondly, as we confront the pressing issue of subsidy removal, it is imperative that we explore innovative and homegrown solutions that not only mitigate the immediate impacts but also pave the way for a more robust and self-reliant economy. In this context, the legalization and licensing of local modular refineries emerge as a panacea, providing a path to energy self- sufficiency, job creation, and economic empowerment.

The legalization of local modular refineries presents an opportunity to harness our domestic resources efficiently. By enabling local communities to establish and operate modular refineries, we can tap into the rich oil and gas reserves that our nation possesses. This decentralization of refining capabilities allows us to reduce our dependence on imported refined petroleum products, creating a more resilient and self-sustaining energy sector.

Furthermore, licensing local modular refineries can serve as a catalyst for economic empowerment and job creation, especially in the communities that host these facilities. The establishment of modular refineries will generate employment opportunities for skilled and unskilled workers, promoting socio-economic development at the grassroots level. This, in turn, contributes to poverty alleviation and helps build a more inclusive economy.

Thirdly, in exploring bold initiatives for economic recovery, we must prioritize diversification. Overdependence on a single revenue source has left our economy vulnerable to external shocks. It’s time to invest in and promote sectors such as agriculture, technology, and renewable energy. By doing so, we not only create new job opportunities but also build a more robust and dynamic economic foundation.

Fourthly, we must address infrastructure deficits head-on. A well-functioning infrastructure is the backbone of economic growth. Roads, bridges, ports, and digital connectivity are not just conveniences; they are essential drivers of commerce. Our commitment to economic recovery must be mirrored in our commitment to building and maintaining world-class infrastructure.

Fifthly, education and skill development must be at the forefront of our recovery efforts. A skilled workforce is an empowered workforce. By investing in education, vocational training, and technology-driven learning, we can equip our citizens with the tools they need to contribute meaningfully to a diversified and growing economy.

Moreover, technology will play a pivotal role in our economic recovery. We must embrace digital transformation, leveraging technology to streamline processes, enhance productivity, and foster innovation. The Fourth Industrial Revolution is upon us, and Nigeria must position itself at the forefront of this global shift.

In addition, partnerships and collaborations, both domestically and internationally, are essential. We should create an environment that welcomes foreign investment, encourages joint ventures, and fosters collaborations between the public and private sectors. Together, we can harness the collective wisdom and resources needed to propel our economy forward.

Lastly, as we navigate this transition, we must be mindful of the social impact. Economicpolicies should be inclusive, ensuring that the most vulnerable in our society are not left behind. Social safety nets, healthcare reform, and poverty alleviation programs should run parallel to our economic recovery initiatives.

In conclusion, the shift to a post-subsidy economy is not just an economic imperative; it is a vision for a more sustainable, equitable, and prosperous Nigeria when effectively articulated and implemented. By embracing bold initiatives, investing in diversification, infrastructure, education, technology, and fostering partnerships, we can lay the groundwork for a future that we can all be proud of.

Together, let us build a resilient and thriving post-subsidy economy, propelling Nigeria into a new era of economic prosperity.

THANK YOU.