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Fuel Subsidy and the Loss of Jobs and Investments in Nigeria

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Submitted By solujobi
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FUEL SUBSIDY AND THE LOSS OF JOBS AND INVESTMENTS IN NIGERIA

This issue of deregulation of fuel prices and the downstream Oil and Gas industry is understandably one on which much debate is going on. Let me start by stating very early that I have nothing against subsidies per se. I am for subsidizing education, healthcare, rural agriculture, rural power etc. I however have everything against a subsidy that is neither creating skills nor building industry. I am against a subsidy that stifles investments and job creation in Nigeria but rather exports jobs and puts stupendous wealth in the hands of a few traders. Let me state upfront that I have spent a better part of my more than two decades of working in a management consulting career advising clients in the oil and gas industry. I have more than an average understanding of the issues facing the industry and I am convinced that unless we get private capital and expertise and a decent regulator into the downstream industry we cannot solve the problem of local value addition, investments and sustainable employment. The problem off course is that no serious investor will put money into an industry where price is set below cost of production and supply.
Most Nigerians really do not know how bad the situation is in the government monopoly controlled downstream sector. An industry that should be employing a significant number of our engineering graduates and technicians yearly employs almost none. Until a few years ago the average age of staff in the downstream oil and gas industry was close to 50! You can work the math out. It means that for at least 20 years, no new blood was infused in reasonable numbers. Now this should be one of the largest employers of labour in our country. A healthy downstream oil and gas industry in Nigeria should be supplying the bulk of fuels for Sub-Saharan Africa. Indeed, World Bank...

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