The Minister of State for Petroleum has said that in view of recent misguided comments and innuendoes, it has become expedient for the Ministry of Petroleum to explain misconceptions around the issue of Petroleum Products Deregulation.
Minister of State for Petroleum, Chief Timipre Sylva, in a statement he personally signed on Wednesday in Abuja, explained that after a thorough examination of the economics of subsidising PMS for domestic consumption, the federal government concluded that it was unrealistic to continue with the burden of subsidizing PMS to the tune of trillions of Naira every year.
The Minister said more so when the said subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians.
Sylva however said the government was mindful of the likely impact of higher PMS prices would have on Nigerians, adding that to alleviate the impact the ministry will roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost.
According to the Minister, deregulation means that the government will no longer continue to be the main supplier of Petroleum Products. “But will encourage private sector to takeover the role of supplyer of Petroleum Products.
“This means also that market forces will henceforth determine the prices at the pump. 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.
“Petroleum Products are refined from Crude Oil. Therefore the price of Crude (the feedstock) for the refining process will affect the price of the refined product.
“When Crude Oil prices were down, Government, through its regulatory functions ensured that the benefits of lower Crude Oil prices were enjoyed by Nigerians by ensuring that PMS was lowered.
“At that time, we indicated that increase in Crude Oil Prices will also reflect at the pump.
“This is a necessary action taken by a responsible Government in the overall interest of Nigerians. 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.
“We can no longer avoid the inevitable and expect the impossible to continue. There was no time Government promised to reduce Pump Price and keep it permanently low.
“Let us therefore ignore the antics of unscrupulous middlemen who would want status quo ante to remain at the expense of the generality of Nigerians. 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.”