The Nigeria Employers Consultative Association (NECA) has commended the Federal Government for reducing the price of petrol, describing the development as welcome.
NECA Director-General, Mr Timothy Olawale, made the commendation in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.
NAN reports that the Minister of State for Petroleum Resources, Mr Timipre Sylva, had on March 18, said that price of crude oil had dropped beyond the expected open market price of imported petrol.
Sylva, in a statement, said that President Muhammadu Buhari, had, therefore, approved that Nigerians should benefit from the reduction in the price of petrol.
Olawale urged government to henceforth allow the international price of crude oil to determine the prices of petroleum products in Nigeria, stressing that the template should be flexible to accommodate changes as they may occur.
“The price of PMS and other petroleum products could have been much lower if the pricing template had been rigorously followed and applied.”
The director-general, however, called for caution since Nigeria is a mono-product economy hinged on oil.
He urged the government to ensure total eradication of the subsidy regime in whatever form in the country.
“Energy consumption subsidy is any policy by the government that is aimed at reducing the price of energy consumed by citizens relative to what the price would have been in the absence of such policy.
“The regulated price, arguably, will reduce the Consumer Price Index (CPI) and make it easy to regulate the level of inflation.
“Subsidy often leads to increase demand for PMS due to over use and waste arising from reduced price of the product, creating unnecessary shortage of supply,” he said.
The NECA chief also urged the government to provide leadership and direction in diversifying the economy.
According to him, the nation cannot hinge its destiny on the price of a commodity in which it has no control on the pricing.
“It is time to deliberately create a roadmap for a rapid diversification of the economy away from oil.
“We need actions; the government needs to create avenues for more economic activities to happen like diversifying the tax revenue of the government beyond oil.
“The shortfall in oil prices should not be a licence to further mortgage the future of the nation with borrowing as the budget is already struggling under the weight of debt service,” Olawale said. (NAN)