Political economist Pat Utomi has labelled the Nigerian National Petroleum Corporation Limited (NNPC) as one of the most opaque and unreliable institutions in the world. Speaking on a televised programme, he urged the government to clean up the organisation to reduce corruption and address ongoing fuel price increases. Utomi criticised the subsidy system, which he believes has led the country into its current economic struggles.
Subsidy Mismanagement
During his interview on Channels Television Politics Today, Utomi expressed that while other countries, such as the United States and European nations, subsidise production, Nigeria has subsidised consumption. He argued that poor resource management, particularly in NNPC, has worsened the situation, stating that the country engaged in “subsidised consumption for pleasure.”
Reducing Corruption
Utomi emphasised that cleaning up NNPC could significantly reduce the corruption tied to the subsidy arrangement. He claimed that eliminating corruption within the corporation would cut the fuel subsidy costs by 60 per cent.He asserted, “I can clean it up if given the job,” emphasising that tackling corruption is the first step in fixing the nation’s energy sector.
Smuggling and Graft
He also pointed out that what Nigeria refers to as a subsidy is, in large part, smuggling and graft. The economist noted that post-COVID-19 fuel consumption rates spiked, sparking concerns about the accuracy of these calculations. He believes that smuggling has played a significant role in the figures used to justify higher fuel prices.
Impact of Subsidies on the Economy
Utomi explained that while subsidies are sometimes necessary to drive production and support the economy, Nigeria’s focus on consumption subsidies is flawed. He argued that excessive subsidies without oversight lead to waste and inefficiency, leaving the citizens to bear the brunt of price increases.
Call for Strategic Use of Resources
The economist concluded by calling for a strategic approach to resource management in Nigeria. He emphasised that subsidies are not inherently bad, but they must be directed towards production rather than consumption. Without significant reform, Utomi warned, the Nigerian economy would remain stuck in its current cycle.
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