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| Timipre Sylva Minister of state for petroleum resources |
The pump price
of petrol was fixed at N125 per litre in March and was reviewed downwards in
April to N123.50.
In May, only the
ex-depot price was reviewed downwards to N108 and the retail price was adjusted
to N121.50 in June.
However, the
price rose to N143.80 in July following a recommendation of the Petroleum
Product Pricing Regulatory Agency (PPPRA).
The increase in
petrol price led to public outcry, as Nigerians decried the government’s action
amid the coronavirus pandemic.
In a statement
on Wednesday, the minister said the price hike was not imposed on Nigerians but
was necessitated by market forces.
Sylva said the
deregulation of petroleum products was done after examining the effects of
petrol subsidy.
He said the
deregulation process eliminated the government’s monopoly and led to an open
market for private investors, under the regulation of the government.
“After a thorough examination of the economics of subsidising PMS for domestic
consumption, the FG concluded that it was unrealistic to continue with the
burden of subsidizing PMS to the tune of trillions of naira every year. More so
when this subsidy was benefiting in large part the rich rather than the poor
and ordinary Nigerians,” the statement read.
“Deregulation
means that the government will no longer continue to be the main supplier of
petroleum products. But will encourage the private sector to take over the role
of supplier of petroleum products.
“This means also
that market forces will henceforth determine the prices at the pump. Inline
with global best practices, the 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.
“There was no
time the government promised to reduce pump price and keep it permanently low.”
Sylva said the
government ensured that Nigerians benefited when the prices of crude oil
reduced globally.
He said an
increase in crude oil prices caused by market forces will also translate to an
increase in retail pump prices across the country.
“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,” he
explained.
“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 an increase in crude oil prices will also reflect at the
pump.”
Sylva said there
is a need to free up investment space in the midstream and downstream segment
of the petroleum sector adding that Nigerians can “no longer avoid the
inevitable and expect the impossible to continue”.
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