Insights – Pensioners and state workers will be immediate beneficiaries of fuel subsidy removal – Dr. Andrew Nevin 

Article summary 

• Pensioners and state workers will be immediate beneficiaries of fuel subsidy removal 
• In the era of fuel subsidy payments, state governments have struggled with minimum wage payments. 

• The NNPCL has not been making payments to the federation account because of its fuel subsidy payment obligation of up to N400 billion every month.  

 Partner and Chief Economist at PricewaterhouseCoopers International Limited (PwC), Dr. Andrew Nevin has said that pensioners and state workers are some of the groups that stand to benefit immediately from the removal of fuel subsidy.  

He said this during the TheTimes Q2 2023 Economic Outlook Webinar which took place on June 3.  

Dr. Nevin said:  

• “The government has a culture of being unable to pay pensioners. We all know the fuel subsidy is a form of corruption and the fuel subsidy benefits those in the upper and middle class and those who lose are the pensioners and the state employees, as state governments cannot pay their minimum wage. Those groups are going to benefit immediately from the removal of the fuel subsidy.”     

He went further to commend the Nigerian government for removing the fuel subsidy because it was hampering performance in other aspects of the Nigerian economy.  

According to him, the Nigerian National Petroleum Company Limited has not made any transfers to the federation account in 2022 and 2023. This is because the company has been making fuel subsidy payments, which the GCEO, Mele Kyari has stated was up to N400 billion monthly.  

Fuel subsidy removal opportunities for young Nigerians

Chinwe Egwim the Head of Economic Research/Intelligence at the Coronation Merchant Bank advised young Nigerians to always have their pulse on market dynamics because they will be able to find relevant opportunities in this manner. Meanwhile, Dr. Nevin advised young Nigerians to look at the fuel subsidy removal as an opportunity to look out for the healthcare and educational sectors.  

According to him, with adequate training, young Nigerians can seek jobs in both sectors whether in Nigeria or in other countries. He also said that there are many opportunities for investments in both sectors.  

Recall that education and healthcare are some of the critical sectors that President Tinubu highlighted in his presidential campaign manifesto as some of the areas he will focus on after the removal of fuel subsidies.  

His campaign manifesto noted that Tinubu will fund infrastructural, agricultural, and social welfare programs to help Nigerians ease off the burdens the fuel subsidy removal will cause. These programs range from road construction to boreholes, public transportation subsidies, education, and healthcare funding programs.    

More Insights 

Also, during the webinar, Chinwe Egwim the Head of Economic Research/Intelligence at the Coronation Merchant Bank, said that the fuel subsidy removal should be able to support Nigeria’s revenue performance. She admitted that there will be an inflationary impact from the policy, and purchasing power will be eroded in the short term.  

However, if the policy is implemented properly, the fuel subsidy removal will mean better economic performance for Nigeria. Ms. Egwim who highlighted the oil and gas sector as one of the credible sectors which can improve the country’s overall economic growth, said that the Tinubu administration should focus on the following to improve sector performance: 

• Improving security 
• Further development of local content 
• Establishment of transportation networks including pipelines, and refineries 
• Establishment of storage facilities 

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