The International Monetary Fund has once again called on the Federal Government to stop subsidising the cost at which consumers buy petroleum products in the country.
The Senior Resident Representative in Nigeria, IMF, Mr. Scott Rogers, who made the call at a press conference in Abuja on Thursday, also said unbridled importation of refined petroleum products posed a danger to the economy, and called for the protection of the nation's infant industries.
He said, "Elimination of subsidy will help fiscal adjustment. Removal of fuel subsidy will definitely have adverse effect on the poor. However, the benefits are overwhelmingly to the better-offs in the society because it is the middle class and the upper class that are using most of the energy and not the poor people.
"The fuel subsidy alone in 2011 was three times the capital budget. That is a lot of money. The pump price of fuel was raised in 2012. The world price of oil also went up. So, now the subsidy on fuel is not what it was in 2010."
He added, "Basically, we are supporting what everybody in Nigeria knows and we think that is the right way to go. There are other forms of subsidies.
"Within the power sector, you structure your tariffs among your consumers so that people like me can pay more than the cost of supply so that the power companies can take services to the poor.
"That is what they do in Kenya; that is what they do in the US. The poorer consumers within the power sector can be subsidised by the better-offs. We support that form of subsidy."
Predicting a decline in global oil prices, Rogers said this posed a great danger to the nation's economy, adding that it had the tendency of wiping out the Excess Crude Account, whose balance currently stands at about $50bn.
He said, "International reserves have been rebuilt and now stand at just over $50bn. Fiscal buffers are being rebuilt but are still well below levels at the time of the 2008 crisis.
"A decline in international oil prices to $97 per barrel (annual average) will begin to erode ECA balances. A fall to $80-$85 will wipe out the ECA balances within a year."
