Fuel price hike: Olawepo-Hashim counsels Buhari to ignore IMF

A former presidential candidate and a chieftain of the ruling All Progressive Congress (APC), Mr. Gbenga Olawepo-Hashim has enjoined President Mohammed Buhari to ignore the bait from the International Monetary Fund (IMF) and the World Bank on the current debate on fuel price hike.

In a statement released by his media office, Olawepo-Hashim explained that the possibility of spending a maximum of $4 billion at current price levels on petroleum products over a 12 months that Nigeria could earn about $30 billion from oil exports at $60 per barrel based on daily export estimates is not the biggest headache in Nigeria finances, but expending about $10 billion on debt servicing. According to him, debt servicing obligation is the biggest elephant in the room that IMF, which functions most of the times, as agent of creditors to weak nations, does not want to talk about.

He posited that in the 1980’s and 1990’s the Brethenwoods institutions put weak third world countries under undue pressure on the management of their economies based on their national debts through ruinous advisories and conditionalities that are not applied on similarly indebted developed nations whenever they want to offer assistance. He added that the United States, the world most indebted country with a national debt of over 100 per cent of her Gross Domestic Product (GDP) does not get such advisory from the IMF. “Right now, most Western countries in the COVID-19 era are printing money to subsidise their people.

So, the conversations we should be having is how developing countries can also enjoy some concessions, not how to take any little support for the people away. At the domestic level, we need a conversation on a national strategy for economic development, not on how to tinker with the price of Petroleum product or value of the National currency which has been an unhelpful path we followed biannually since 1986,” he said.

The APC chieftain added that the size of what is called subsidy could have even been exaggerated as the value of crude allocated for domestic consumption (415,000 barrels per day) which is swapped, should stand to the credit of local Petroleum product account after deduction of OPEX and average unit CAPEX costs.

“When this particular sum is accounted for, the so-called ‘subsidy cost’ will be relatively smaller than the costs bandied about,” he said. Olawepo-Hashim maintained that oil is a strategic national commodity for Nigeria as it is for all oil producing countries, and the policy surrounding it must be well thought out relative to other matters in the economy.

“For instance, diesel and petrol are not just products that end up in the tanks of cars and lorries for transportation. These products are the fuels for the tiny generator at the barber’s shops, tailor’s shops, the corn mills, rice mills, local clinics, hospitals, bakeries, small scale industries, telecommunications facilities, banks etc. “Petrol and diesel fuels 90 per cent of economic activities in Nigeria. Any increase in the prices causes significant distortion in the economy and whatever gain to the treasury will be wiped off by the losses it will cause to the economy and the net balance will be negative.

“Any time petroleum prices go up, the people feel it everywhere around them immediately, and that is why anger and reactions to such increases are usually spontaneous,” he said. He also stressed that the arguments surrounding petroleum pricing are not new and recalled that since the regime of General Yakubu Gowon, which moved the price from 6 kobo to 8.45 kobo in 1973, prices of Petroleum products have been increased periodically for about 30 times, even when local refineries were working. According to him, “Nigeria’s economic managers especially those who have appropriated the titles of technocrats for themselves and their acolytes in the media and the market fundamentalists of the ‘Chicago school’ need to demonstrate more creativity in their postulations than rehashing policies whose outcomes have been rounds of colossal failure after three decades of application in Nigeria.”

He added: “I will be very upfront with Mr. President and leader of my party, President Muhammadu Buhari. He does not need to listen to IMF and World Bank on this particular matter. The truth is that fuel price increase is a needless headache we do not need at a time like this. “There are many expenditure items on the, public budget we can knock off instead of what is called petrol subsidy. It will be political suicide for our great party to contemplate increase in prices of petroleum products at this time. I believe the leader of the party; President Buhari will not take the bait.”




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