By Adedapo Adesanya
The federal government has said that the deregulation of the downstream oil sector will help to attract more investments into the country as the policy will free up trillions in naira.
This was disclosed by the Minister of State for Petroleum Resources, Mr Timipre Sylva, in a statement titled Deregulation: The Facts And The Reasons Behind The Policy released on Thursday.
The minister noted that the federal government had concluded that it was unrealistic to continue with the burden of subsidizing the commodity which costs trillions of Naira every year, especially since the subsidy was benefiting the rich rather than the poor and ordinary Nigerians.
He said, “It has become expedient for the Ministry of Petroleum to explain misconceptions around the issue of Petroleum Products Deregulation.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year.
“More so, when the subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians.
“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 supplying Petroleum Products.”
The minister then said that following this line of action, market forces will henceforth determine the prices at the pump but noted that the government will continue to play its traditional role of regulation
This, it said, will be “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,” he added.
Mr Sylva noted that when crude prices tanked, the government ensured that the benefits of lower prices were enjoyed by Nigerians by ensuring that PMS price was lowered.
He noted that government at that time indicated that an increase in prices would also reflect at the pump.
“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,” he added.
The minister further said the government understood the likely impact higher petrol prices would have on Nigerians, and said it was working on solutions that will be beneficial to Nigerians.
“To alleviate this, we are working very hard to roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost,” he concluded.
