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NECA wants FG to deregulate oil sector to improve debt profile

The Organised Business Sector under the Nigeria Employers Consultative Association (NECA), on Friday, said that except the Federal Government stopped subsidizing fuel, its debt profile would continue to increase.

Mr. Timothy Olawale, Director-General of NECA, said at a stakeholders’ forum in Lagos that business operators were concerned about government’s refusal to deregulate the downstream sector.

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Olawale said that the fuel subsidy regime and the high debt profile were a significant leakage in national revenue mobilization.

He said that in spite of past counsel, the government had yet to develop the political will needed to deregulate the downstream sector of oil and gas. According to him, a former Central Bank Nigeria

(CBN) Governor, recently said that in 2011, the country made 16 billion dollars from petroleum sales and spent 8.2 billion dollars to subsidize imported petroleum products.

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He noted that the non-deregulation of the petroleum sector had fueled the continued dependence on foreign sources for petroleum products.

The NECA boss who gave insight into the need for urgent deregulation of the downstream oil sector said that the country had spent over N9 trillion on fuel subsidy. He noted that the state spent N15.5 trillion on capital expenditure,

N2.1 trillion on health, and about N3.9 trillion on education in the last decade. ”This is a misplacement of priority and shows that critical areas of development such as education,

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health, and infrastructure have suffered due to the expenditure on fuel subsidy. ”Fuel subsidy regime has created phony and emergency billionaires at the expense of millions of pauperized Nigerians,”

the Director-General said. He said that the growing debt stock with a massive percentage of the budget over the last decade going to debt servicing was worrisome.

He noted that incurring debt for developmental purposes was not in question, but the over N24.39 trillion debt stocks, taking over 20 percent of the annual national budget to service, should be a source of worry.

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He said that although the argument of debt to GDP ratio was tenable, the IMF warned that Nigeria’s Debt-to-GDP Ratio was risky and could not be guaranteed going forward.

“Government should manage the rising debt profile, both at the states and federal level as this portends a gloomy future for the nation.’’

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Olawale urged the government to take steps to end the subsidy regime and use the savings to support the real sector, subsidize critical and productive economic industry and help lift the proposed 100 million Nigerians out of poverty.