The subsidy on Premium Motor Spirit (PMS) otherwise called petrol, will be gone under an Atiku Abubakar presidency, according to Vice Presidential candidate of the PDP, Peter Obi.

During a ChannelsTV program on January 1, 2019, Obi said an Atiku presidency will do away with the subsidy on petrol—a move that could prove unpopular among Nigerians, given high poverty levels and the multiplier effect a hike in petrol price at the pumps could have on the larger economy.

During the vice presidential debate of December 14, 2018, Obi referred to the federal government’s outlay on petrol as “subsidizing inefficiency”. 

During the ChannelsTV program called Politics Today, Obi doubled down on his argument against keeping the subsidy regime.

“Go and check the just presented 2019 budget: health is N341 billion and education is about N450 billion. So, if you put health and education which is the most critical component of the development of any economy together, it is N800 billion.

“So, when you are paying over a trillion in subsidy. It is unacceptable. I have said it categorically, we are paying for inefficiency,” he said.

Market forces could force price of petrol down in a liberalized regime

Obi argued that a removal of subsidy could lead to a temporary hike in the pump price of petrol, but market forces will reduce the price in the long run. 

 “If you remove it (subsidy), I can assure you that within a year of efficient management of that process, the price would be what it is today if not less,” he said.

“Part of what we are paying today is the demurrage they pay at the ports. If a vessel comes into our ports to discharge, it takes weeks.

“So, a trailer that will charge you to bring out your goods from Apapa Port, instead of charging you N200,000 will charge you almost a million because it takes him two weeks to go in and about a week to come out. For three years, we couldn’t even clear out trailers from Apapa port to Ikorodu. It doesn’t make sense”, Obi said.

During the vice president debate, Vice President Yemi Osinbajo had argued for the sustenance of the subsidy regime because terminating it could make life even more difficult for Nigerians. 

Nigeria exports the crude oil it produces, for refining. The refined product returns at an extra cost for the masses.