Basil Abia, a prominent energy analyst and co-founder of Truva Intelligence, has advocated for the implementation of a temporary subsidy in Nigeria to alleviate the economic consequences of skyrocketing global oil prices. He expressed concern that Nigeria does not possess the structural capacity needed to withstand external energy disruptions.
During a discussion on ARISE News on Tuesday, Abia pointed out that the ongoing upheaval in the global oil market, primarily due to tensions involving Iran, is already exerting inflationary pressures that Nigeria is ill-equipped to manage.
"With Iran significantly influencing oil supply, we are witnessing global inflationary transmission," he remarked.
He elaborated that the rise in energy costs is likely to have far-reaching implications across various sectors, particularly in food production and manufacturing.
"The impact will not only manifest in energy prices but also in food prices due to increased fertilizer costs," Abia noted.
He also highlighted that several nations are already taking measures to protect their economies from such shocks.
"For instance, South Korea has established a $17 billion relief initiative, while Spain has launched a 5 billion euro plan aimed at safeguarding their local manufacturing sectors," he added.
However, Abia pointed out that Nigeria currently lacks the necessary infrastructure and policy measures to effectively implement similar initiatives.
"Unfortunately, in Nigeria, we do not have any buffering mechanisms to absorb these shocks," he stated.
He underscored that inadequate infrastructure, particularly in public transport and reliable power supply, renders demand-management tactics ineffective.
"Apart from Lagos, which has a relatively decent bus rapid transit system, the city has less than 600 buses to serve nearly 17 million residents," he explained.
Abia further criticized the country's heavy reliance on costly diesel due to unreliable electricity.
"Diesel prices have surged from 1,200 Naira per litre to as high as 2,000 Naira, depending on the region," he said.
Considering these challenges, he stressed that immediate government intervention is crucial.
"We certainly require a temporary subsidy in Nigeria, at least comparable to pre-crisis levels before the Iran conflict," he urged.
Abia’s comments shed light on the urgent necessity for Nigeria to address its vulnerability to global energy fluctuations, with recommendations for temporary subsidy measures reflecting the immediate need to protect both citizens and businesses from rising expenses.
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