Subsidy payment breeds inefficiencies – Boyi

Former Managing Director,  eternal oil, Ibrahim Boyi has insisted that continued payment of subsidy on petroleum products was breeding inefficiencies in the oil and gas industry. 

Mr. Boyi, who said this at the Valuechain magazine annual lecture and award ceremony on Wednesday in Abuja, added that it has “resulted to lack of investment in the sector as the environment does not allow people to invest and make profit.”

According to him, it was doing serious damage to the economy just as it comes at a huge cost to the government. 

Over the years, there have been strident calls on the federal government to put an end to subsidy in the oil and gas sector. 

International Monetary Fund (IMF) at its last spring meeting in Washington DC advised Nigerian authorities to stop subsidising the petroleum sector and put the money into critical areas of the economy such as roads, health and education. 

He said: ‘Government continues to hide behind subsidy to create a whole lot of inefficiencies.

“I can also assure you that operating in the industry is extremely difficult not just to the government but to the economy. A lot of companies that have made huge investments in the sector today are facing difficult times. The way subsidy works is not business oriented because a lot of companies are almost going out of business. 

“Subsidy is not commercially viable, its not sustainable and it does not help the development of infrastructure. It is faulty and the sooner the government accepts it the better. NNPC, I don’t know how they are doing it, but i am almost sure they are operating at a loss.”

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