Prof. AbdulGafar Ijaiya of the Department of Economics, University of Ilorin, has expressed optimism at President Bola Tinubu’s inaugural remarks on removal of fuel subsidy, saying this may reduce price at the long-run.
Ijaiya said on Monday in Ilorin observed that with commitment from the Federal Government in revamping existing refineries alongside Dangote refineries, this will increase availability of petroleum products.
The expert who however explained that though such effect may not be felt immediately, noted that the present pump price is about N200, depending on filling stations across the country.
He questioned if the present fuel price at about N200 was as a result of the subsidy removal, adding that if it is not, then fuel may likely increase with about 50 per cent rate after the removal.
“But the thing is that very soon, what has gone wrong with the refineries will be corrected and Dangote refineries will commence by July/August,” he said.
Ijaiya, who teaches in the Faculty of Social Sciences of the university, pointed out that in the beginning there might be increase in prices of foods and services.
He however asserted that in a society like Nigeria where people are used to hike in prices, it would not mean much to the citizens.
“By Economics principle, we have adjusted our expenditure profile consumption to particular items. We have moved from consuming luxury and unnecessary items to necessary items.
“This means people go for what is necessary and do away with those that are not,” he said.
Ijaiya affirmed that in the long run, the fuel pump price will adjust downward and there would be more supply of the products.
He further added that when there are more supply of a particular product in the market, it will automatically reduce the price.
“If we have enough supply, with time and there are no other man made distortion that has to do with our behaviour, I see us buying it between N80 and N100 per litre,” he predicted.
The economist also foresees filling station advertising and competing for sales, saying it will be good for the nation.
He however cautioned that “we are in an uncertain world”, but maintained that fuel subsidy removal would be good for the country eventually as only a minority are benefiting from it.