“brace For Higher Fuel Prices”, Minister Tells Nigerians

Minister of State for Petroleum Resources, Chief Timipre Sylva has urged Nigerians to brace for higher fuel prices as the federal government has decided to end fuel subsidy amid a rebound of global crude oil prices.

Mindful of the likely impact higher Premiuim Motor Spirit (PMS) prices would have on the economy, Sylva said that government was in collaboration with other stakeholders to roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost.

The government, which arrived at this position after a thorough examination of the economics of subsidising PMS for domestic consumption, revealed that it was unrealistic to continue with the burden of subsidizing petrole to the tune of trillions of Naira every year.

According to a statement aimed at explaining misconceptions around the issue of petroleum products deregulation, the Minister confirmed that government would no longer continue to be the main supplier of petroleum products, but will encourage private sector to takeover the role.

Sylva noted that in a deregulated petroleum regime, market forces will henceforth determine the prices at the pump, while government would shift its focus to regulation of the industry.

“In line with global best practices, government will continue to play its traditional role of regulation; to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers; a regulatory function not unlike the role played by the Central Bank of Nigeria in the banking sector; ensuring that commercial banks do not charge arbitrary interest rates,” he said.

In emphasizing the need for a completely deregulated petroleum products market, Sylva highlighted the direct relationship between the price of crude oil and that of the refined product.

“When crude oil prices were down, government, through its regulatory functions ensured that Nigerians enjoyed the benefits of lower crude oil prices by ensuring that the price of PMS was lowered. At that time, we indicated that any increase in crude oil prices will also reflect at the pump. There was no time government promised to reduce pump price and keep it permanently low,” he stressed.

Sylva further described deregulation as a necessary action in the overall interest of Nigerians, “as we can no longer avoid the inevitable and expect the impossible to continue”.

Corroborating experts who have linked underinvestment and non-performing oil and gas loans in Nigeria’s downstream petroleum industry to its populist policies, Sylva confimred that “Indeed, one of the reasons we have been unable to attract the level of investments we desire into the refining sector has been the burden of fuel subsidy.”

“We need to free up that investment space so that what happened in the banking sector, aviation sector and other sectors can happen in the midstream and downstream oil sector. In addition to attracting investments and creating jobs and opportunities, this very important policy direction will free up trillions of naira to develop infrastructure instead of enriching a few,” he affirmed.

While acknowledging the likely impact higher PMS prices would have on Nigerians and the economy at large, Sylva said that the Ministry was in collaboration with other industry stakeholders to roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost.

He urged Nigerians to ignore misguided comments and the antics of unscrupulous middlemen who would want to retain the status quo at the expense of the public.

Source: Marine & Petroleum Nigeria