Prof. Magnus Kpakol expressed his support for a subsidy on fuel production instead of consumption, drawing examples from countries like Canada and the United States that have implemented similar policies.
Kpakol’s endorsement follows the Federal Government’s proposal to provide financial assistance to 12 million impoverished households in Nigeria, aiming to alleviate the economic hardships caused by the removal of fuel subsidies.
President Bola Tinubu outlined this six-month relief plan in a letter to the House of Representatives, which pertained to an $800 million World Bank loan request initiated during the former administration of President Muhammadu Buhari, dedicated to the social safety net program.
These developments unfolded shortly after President Bola Tinubu announced in his inaugural speech that the fuel subsidy had been eliminated, subsequently assuring millions of Nigerians of the government’s commitment.
While acknowledging the Tinubu administration’s efforts to terminate the subsidy regime, Kpakol underscored the challenges faced.
He mentioned, “I acknowledge that we did not require the kind of fuel subsidy we had been receiving. Even here in Canada, where I currently reside, they abolished their fuel subsidy programs over 11 years ago, although they continue to subsidize fossil fuels at the production level.”
Kpakol went on to highlight that many countries, including the United States, provide subsidies at the production level rather than focusing heavily on consumption.
However, he recognized the difficulties faced by the Tinubu administration in addressing this issue and emphasized their attempts to find a resolution. Kpakol stated, “It is not an easy task for the administration to tackle this problem and then claim they have abandoned something they could have pursued.
“They are confronting a very challenging situation and are striving to resolve it through their actions.”
A Reuters report published in March indicated the complexity of calculating the cost of U.S. subsidies for the fossil fuel industry, as these incentives span the entire U.S. tax code. However, estimates range from $10 to $50 billion per year. Additionally, a recent report by The Canadian Press highlighted Canada’s commitment to fulfill a 14-year-old pledge made by G20 countries to phase out government subsidies for fossil fuel companies, as these subsidies encourage “wasteful” consumption and undermine efforts to combat climate change.
Canadian Environment Minister Steven Guilbeault also mentioned forthcoming policy guidelines that would dictate the circumstances under which future federal investments could still support Canadian oil and gas firms.
