Fuel subsidy return will collapse 15 Northern states within three months — OAU Prof.

Professor Tunji Ogunyemi of Obafemi Awolowo University (OAU), Ile-Ife, has warned that restoring petroleum subsidy could trigger severe financial difficulties for several Nigerian states, particularly in the North.

Ogunyemi, an economic historian, lawyer and public affairs analyst, said more than 15 northern states could collapse within three months if the subsidy regime is restored.

He argued that returning to petroleum subsidy would reduce the revenue accruing to the Federation Account, on which most states depend for their monthly allocations.

The professor spoke on the Open Forum 360 podcast hosted by Dare Adekanmbi.

According to him, reversing the subsidy removal would have serious consequences for the country’s finances.

“I think it is calamitous, to say the least, if we reverse the subsidy regime in Nigeria in favour of returning the subsidies,” he said.

Ogunyemi identified reduced accruals to the Federation Account as one of the major consequences of restoring the subsidy.

“The Federation Account is the jugular of more than 30 states in the federation. Only about four states in Nigeria can survive without the Federation Account.

“So if you now say reduce the accrual from the federal account, I tell you more than about 15 states in the North will collapse. They will collapse within three months,” he said.

He further warned that reduced federal revenue could leave states struggling to pay workers’ salaries and pensions, while also limiting their ability to execute capital projects.

“The second is that states will return to a regime of incapacity to pay salaries, let alone pensions. That is consumption expenditure.

“You reduce the revenue in that respect, you will see a situation in which government will not be able to support its minimum expenditure, let alone go for capital expenditure,” he added.

Ogunyemi also listed Nigeria’s ability to meet its debt obligations among the areas that could be affected by a return to subsidy.

On Atiku’s Subsidy Position

Commenting on the position of former Vice-President Atiku Abubakar, the African Democratic Congress (ADC) presidential candidate, on petroleum subsidy, Ogunyemi said the former vice-president needed to provide greater clarity on the implications of his proposal.

He described the position as “playing to the gallery”, while stressing that his criticism was made with respect to Atiku.

“I think it is playing to the gallery, with due respect to him. He should be a little less opaque about his policy.

“You don’t want to get political support through votes or more votes by wanting to cut the jugular of your country,” Ogunyemi said.

The professor listed Lagos, Delta and Rivers among states he believes could cope without monthly federal allocations.

He, however, cited Taraba as an example of a state that would be heavily dependent on federal allocations to sustain its finances.

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