The Emir of Kano, Muhammad Sanusi II has advised the Federal Government to convert the current subsidy regime from a “naked hedge”, to proper subsidy to avert bankruptcy.
A statement by the Kano Emirate Council, said the Emir spoke at the third National Treasury Workshop convened in Kano by the Office of the Accountant General of the Federation.
According to the Emir, “One major area of concern is the huge amount the country continues to spend on subsidizing petroleum products.”
“The Emir recalled that in his days as Central Bank Governor, he had alerted the nation that in 2011 for example, the Federal Government earned $16 billion from the oil sector but that the nation spent $8 billion on importing petroleum products and $8.2 billion on subsidies of the same products.
“The result is that all the money earned from oil went into petroleum imports. This situation is unsustainable and could eventually lead to bankruptcy if not addressed.
“For example, he said, the Federal Government could pay 30 per cent of the cost of petroleum products this year, and reduce it by 10 per cent annually until by 2022 when the subsidy is eliminated.
“Although he recognized that it would be politically difficult to remove the subsidy at a go, he insisted that Nigerians must be ready to pay higher prices for petroleum products if oil price goes up.
“The government needs to put the money saved into education, health and other development projects, he said.
“The Emir also advised the Federal Government to stop subsidizing electricity tariffs as poor people will pay cost-recovery tariffs if they have a 24-hour supply of electricity.
“This enables them to earn income from small enterprises and lift themselves out of poverty.
“He gave an example of Cote d’Ivoire where in Abidjan there is a regular supply of power and the citizens pay cost-reflective tariffs.
“Sanusi raised concerns about recent reports that Debt Service/revenue ratios have risen to 70 per cent and stressed that clearly the nation cannot afford to continue spending on these subsidies.
“He advised treasurers to advise their principals on the unsustainability of these arrangements in order to strengthen the fiscal balance sheet of the government and improve the economy.
“At the beginning of his speech, the Emir had expressed reluctance to speak at events because every suggestion made to improve things is always treated as a criticism.
“He said he had decided not to attend such events again but that he was there to honour the Accountant General of the Federation who hails from Kano.”
