With the apparent end of ‘artificially’ low Premium Motor Spirit (PMS) prices, Bismarck Rewane, top-notch analyst said the time is rife for the Federal Government to set up social safety nets to absorb the shock.
“True to the “Subsidy is gone” announcement of May 29, 2023, Premium Motor Spirit (PMS) prices in Nigeria now range from N855 to N1,400 per litre, more than four times the N197 per litre in May last year”, said Rewane, Chief Executive Officer (CEO) of Financial Derivatives Company (FDC) Limited.
The price increase is attributed to an official price review by the Nigerian National Petroleum Company Limited (NNPCL) and rising uncertainties, exacerbating the endemic PMS scarcity and resulting in tortuous petrol queues in Nigeria’s major cities.
“While the adjustment is expected to reduce the annual subsidy spending, consumers are estimated to lose about N5 trillion to N14.6 trillion to the government, Rewane said in the latest edition of FDC Prism, the Think Tank in-depthly
He said the resulting income squeeze, increased transportation and logistics costs, and heightened inflation risks deepen the ongoing cost-of-living crisis.
“It is now critical to ensure that savings from subsidy removal are directed toward social programs that alleviate this burden. Targeted welfare initiatives, subsidized public transportation, and investments in essential infrastructure are essential to boosting the purchasing power of the most vulnerable.
“Without these measures, the economic strain will persist, increasing the risk of social unrest and constraining long-term growth prospects. The government must prioritize redistributive policies to ensure the benefits of fiscal adjustments are shared with the groups hardest hit by rising costs”, said Rewane..
Rewane said, India has become a model for economic growth among emerging markets, averaging at least seven per cent annual real Gross Domestic Product (GDP) growth over the past 30 years, and is expected to become the world’s third-largest economy by 2027 based on its GDP size. A critical factor in this success is India’s emphasis on education. India’s Human Development Index (HDI), which considers life expectancy, education, and gross national income per capita, increased to 0.644 in 2022 from 0.586 in 2014.