The Minister of State, Petroleum Resources, Mr. Timipreye Sylva, has said that in order to cushion the effect of the removal of petroleum subsidy on Nigerians, the Federal Government is as fast-tracking the nationwide roll-out of cleaner and cheaper alternative to premium Motor Spirit (PMS), also known as petrol, such as liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG).
Minister of State for Petroleum Resources, Chief Timipre Sylva, had disclosed that the Nigerian government was not currently in a position, financially, to pay subsidy, as the COVID-19 pandemic had impacted negatively on the country’s finances.
According to him, since the introduction of the deregulation policy in March 2020, the country had saved about N1 trillion.
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Sylva noted that the deregulation of the downstream petroleum sector and the removal of subsidy was not a political decision, but had become inevitable, especially with the effect of the COVID-19 pandemic, the low crude oil prices, and curtailing of Nigeria’s production output by OPEC, which had constrained government’s revenue.
“It became necessary that the country cannot sustain subsidy payments, hence the decision to deregulate. The government has stopped subsidizing petrol at the pump, but will now play its traditional role of protecting consumers from exploitation, by ensuring that marketers do not profiteer at the expense of ordinary Nigerians and consumers of the product.
“We are no longer in the business of fixing prices; we have stepped back and allowed market forces to determine the prices. Henceforth, if crude oil prices go up or down, it would reflect at the pumps.Mr Timipreye Sylva
“This is about the survival of the country and there are certain things the country can afford at this time. We have cut production to 1.412 million barrels, which had halved our earnings,” he said.
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According to him, the revenue that is currently available to the government had reduced considerably, and has raised the question of where would the government get the money to pay the subsidy.
“It is a necessary policy; we would get over this initial pain, with time, we would get past it,” Sylva maintained.
The minister further explained that the savings of about N1 trillion since the removal of subsidy come from the removal of the N500 billion earmarked for subsidy payment in the 2020 budget and the removal of foreign exchange differentials, which saved the country around N500 billion also.
The Petroleum Products Pricing Regulatory Agency (PPPRA), had informed that preceding federal administrations in Nigeria spent an average of N8.9 trillion on fuel subsidy between 2006 and 2015.
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A PPPRA data released on Monday to support the need for deregulation of the downstream petroleum industry, stated that the bulk of the sum was expended between 2011 and 2015, where N6.7 trillion, representing 74.8% of the total were spent on subsidy.
A breakdown shows that N257.36 billion, N271.51 billion, N630.57 billion, N409.31 billion, and N667.08 billion were spent on fuel subsidy in 2006, 2007, 2008, 2009, and 2010, while in 2011, 2012, 2013, 2014 and 2015, fuel subsidy gulped N2.1 trillion, N1.35 trillion, N1.32 trillion, N1.22 trillion and N653.51 billion.
By Chibisi Ohakah, Abuja