Why oil subsidy must go, by Sanusi

 By Osagie Otabor, Benin 27/11/2011
Central Bank Governor, Mallam Lamido Sanusi, has warned of grave economic consequences if the subsidy on oil is retained. 
He described the proposed removal of oil subsidy as a necessary decision to secure the future of the country.
Sanusi spoke yesterday at the 37th convocation ceremony of the University of Benin (UNIBEN) where he was conferred with a honourary Doctorate Degree of Sciences.
The CBN governor, who disclosed that over $8bn were sold to oil marketers in the name of importing refined products, said “We need to stop paying these subsidies and invest in our refineries and create jobs for our people.”
He argued that the proposed oil subsidy removal is not lack of sensitivity to the pain it will cause but recognition of the consequences of not taking the decision. 
If retained, he warned that subsidy on oil will lead to Greek- type economic situation in a few years time. 
Sanusi said, “Economic decision has taken on the basis on what is of best long term interest to the economy. To continuing borrowing trillions of naira and subsidising current consumption is to ask our children to pay for our comfort today. 
“Stable economies in the world are sick.  There are dark clouds on the global horizon. It is important to take difficult decision today that may be politically unpalatable to secure our future. 
‘’We have to face the fact that we simply cannot continue to live above our means. If we do not take that decision our children are going to have difficult situation that the future of our country will be mortgaged.
He went on, “We are in a better situation than many countries. Two years ago we took decisions that Europe should have taken. Nigeria banks are the most capitalised banks today. 
‘’The banks can cope with any shocks and we have taken the decisions that Europe is grappling with and is still unable to take. 
‘’We have to move beyond financial issue to fiscal issues. It is not enough to fix financial markets we must look at all areas of risk to the economy.’’ 
Sanusi challenged professors to debate on oil subsidy.
He tasked them to have strong voices that will convince politicians that questions of difficult decision are questions of the future of the Nigeria economy. 
According to him, “University community has a role to play in turning this debate from emotions and sentiment into a debate based on hard economic reality. 
‘’We have to face the fact that we simply cannot to live above our means. Academic economists can come out and let us engage in robust debate. I do not think there is anyone who is ideologically opposed to subsidies. 
“Academic economists should come out and let us do an analysis of the benefit and cost. Let us look at how we can minimise the cost and move forward with that necessary decision otherwise we risk blaming ourselves in the next three or four years for not taking that decision.”

SOURCE: The Nation, 27 November 2011. http://www.thenationonlineng.net