PMS at N617/l, persistent increase in fuel prices may lead to closure of manufacturing sector in Nigeria - Professor Ekekwe

Oredola Adeola

Professor Ndubuisi Ekekwe, Lead Faculty of Tekedia Institute, has cautioned that the price of Premium Motor Spirit (petrol) at N617 per litre and the continuous rise in the prices of petroleum products are unsustainable in a generator economy without grid-anchored electricity.

He emphasised that persistent fuel hike will lead to the closure of the manufacturing sector and relocation to places that guarantee sustainable, available and affordable electricity.

Professor Ekekwe, who is also the Chairman of Tekedia Capital, made this known in a remark on the sideline of the recent increase in petrol pump price, obtained by EnergyDay on Tuesday.

According to him, based on AO Lawal’s Economics textbook, companies consider the availability of factors of production before they would locate their operations. In that secondary school textbook, there was a section he called “Location and Localization of Industries”.

He said, ” The state of the energy sector in Nigeria is one of the key components of production, and without energy, there is no economy.

“In Germany, industrial output is fading because cheap energy from Russia has gone. But Germany will be back – they will find a way to subsidize energy for their industries.

“The decision of Nigeria’s government to remove fuel subsidy, instead of fixing the corruption which makes production-oriented fuel subsidy ineffective, will trigger an avalanche of degraded production output that will decimate the economy.

“It is not a smart policy to think markets will pay the full cost of energy when EVERY productive nation in the world subsidizes energy, including US, Japan, China and everyone.

Prof. Ekekwe further noted that the country’s problem is not fuel subsidy, adding that the challenge is the corruption in fuel subsidy which makes the regime look bad.

He said, “Yes, open borders with neighbouring African countries, fake invoicing, etc are not due to fuel subsidies. Those are weaknesses in governance.”

Ekekwe, Lead Faculty of Tekedia Institute, therefore, charged the Government to fix the fundamental challenges and give manufacturers in Nigeria the opportunities to compete.

He emphasised that at N617 per litre, the only option for manufacturers is closure since there is no national grid-anchored electricity in our generator economy.