Saby Elemba, in Owerri
A former chairman of the Manufacturers Association of Nigeria (MAN), has said that the removal of oil subsidy as announced by President Bola Tinubu came as a rude shock to Nigerians especially the manufacturing sector because of its enormous implications.
Romeo Anyanwu, in a telephone interview, stated that the subsidy removal would bring about high cost of energy because the public sector energy is very, very inefficient and as a result, everybody is generating their energy to keep business afloat. The essence of that oil subsidy removal is that the cost per litre will increase in line with the exchange rate available.
Secondly, it is going to bring inflation, prices of every other thing will increase, because they are dependent on transportation “whether you produce goods or you import goods, you have to move them from point of manufacturing to distribution and consumption,” he said.
Government he said, did not build shocks to absorb the high inflation that is coming, if there were preliminary things done to cushion the effect people could have welcomed it.
“For me it could have been better if it was done in phases. I am not saying that subsidy should not be removed but removing all of them without a boost to cushion the effect is very dangerous and is not going to augur well with us”.
He said that there may be an uprising in the country as a result of subsidy removal and negative consequences, including hardships which will bite harder on Nigerians if they are pushed to the wall.
Anyanwu stated that the removal of oil subsidy would affect a lot of manufacturing industries, and will affect a lot of the members of the manufacturing sector, especially companies dealing in glass production which need a lot of energy to operate.
“The cost of production is going to increase and the people do not have the capacity to meet up, so the consumption level is going to drop and the demand is going to drop and some will go off production and generally the economy will drop and gross domestic product (GDP) is going to drop, every thing is going turn out negative till a point when they will bring some cushioning remedy”.
On the effect on the workforce of companies, he stated, “there is going to be retrenchment by companies. First of all when your overhead becomes high and you want to sustain the operation you will start with the variables you have control of, like salaries and wages. You either negotiate to reduce salaries and wages to maintain the number of people working for you or go for right sizing “.