Minister of Information and Culture, Alhaji Lai Muhammed, has
outlined what he described as benefits of the recent new pump price
increase as announced last week by the Federal Ministry of Petroleum
Resources, stating that the measure was in the overall interest of the
nation and the citizenry.
The minister who spoke yesterday during a
media interactive with the Abuja based Editors and Bureau Chiefs of the
nation’s media organisations, said the price increase was a “necessary
evil” if the nation must survive. Among the benefits of the current fuel
price regime, he said, is the total elimination of the perennial and
persistent fuel scarcity by ensuring availability of the product across
the country. He stated that it would reduce the incidence of hoarding,
smuggling and diversion of the products substantially and stabilize
price.
Lai Muhammed also stated that the measure was equally aimed
at ensuring market stability and improvement in the fuel supply
situation through private sector participation. He however explained
that it would further create labour market stability, which in turn will
“potentially create additional 200,000 jobs through new investments in
refineries and retails and prevents potential loss of 400,000 jobs in
existing investments”.
And to ensure that these benefits are fully
achieved, the minister explained that government is therefore seeking
the understanding of all Nigerians, and appealing to the organized
labour to sheathe their sword and cooperate with the government to
ensure full success of the new fuel price adjustment.
He said:
“This is not the time for any action that will further worsen the
economy. The situation is dire, not just in Nigeria but elsewhere around
the world. For instance, the United Arab Emirates, the third-biggest
oil producer in OPEC, has become the first country in the oil-rich
Persian Gulf to remove transport fuel subsidies. In addition, the
country has announced that with effect from 1 August, 2016, fuel prices
will be deregulated. Also, in response to fiscal pressure caused by the
fall in crude oil prices, OPEC’s top oil producer Saudi Arabia has
announced a plan to raise fuel prices. You can now see that this is
indeed a global problem.”
The minister pointed out that “we have
no choice than to liberalize the price of petrol, if we are to end the
crippling fuel scarcity that has enveloped the country, ensure the
availability of the products and end the suffering of our people over
the lingering scarcity“.
On the growing notion that the new petrol
pump price regime amounts to a total withdrawal of the alleged existing
fuel subsidy, the minister assured that there is no such subsidy
removal by the President Muhammadu Buhari government. “No. There is no
subsidy to remove because no provision was made for subsidy in the 2016
budget. Last year, the government paid out N1 trillion in subsidies, and
that’s one sixth of this year’s budget. We can’t afford to pay another 1
trillion Naira in subsidy “.
On whether government is planning
any palliatives in the wake of the new price regime, Muhammed said that
the “entire 2016 Budget is packed with palliatives. Some 500,000 billion
Naira has been set aside for social intervention that will touch the
lives of millions of Nigerians and lift millions more out of poverty “.
Some
of the palliative intervention measures as listed in this year’s budget
by government, according to the minister, includes: the 500,000
graduates that are to be employed and trained as teachers; 370,000
non-graduates (artisans, technicians) to be trained and employed; 1
million people (Farmers, market women, etc) to be granted loans to set
up small businesses; the Conditional Cash Transfer to be made to the
most vulnerable people (not unemployed graduates); School Feeding
targeting 4.5 million school children and the Bursaries/Scholarships for
STEM (Science, Technology, Engineering and Mathematics) students “
Lai Muhammed however faulted the comparison being made by some
critics and cynics of the new petrol pump price hike, arguing that it is
clearly different from the previous similar increase in 2012 by the
regime of former President Goodluck Ebele Jonathan. “Our answer to that
is that there is no basis for comparison. The conditions in 2012 were
vastly different from the conditions now. Then, oil was selling for over
100 dollars a barrel, compared to just a little over 40 dollars a
barrel now. Then, the country was awash in forex, thanks to the high
earnings from oil. Then the foreign reserves were high. The situation
today is dire: Earnings from oil have fallen drastically. Foreign
reserves have fallen. The new price regime is simply inevitable.
“With
the drastic fall in the price of crude oil, which is the nation’s main
foreign exchange earner, there has also been a drastic reduction in the
amount of foreign exchange available. The unavailability of forex and
the inability to open letters of credit have forced marketers to stop
product importation and imposed over 90% supply on the NNPC since
October 2015, in contrast to the past where NNPC supplies 48% of the
national requirement “.
He maintained that the “ truth is that the
NNPC does not have the resources for, nor is it designed to meet this
increase in supply. The result is the crippling fuel situation across
the country. Pushed to supply 90% of the products required for domestic
consumption, the NNPC has continued to utilize crude oil volumes outside
the 445,000 barrels/day allocated to it, thereby, creating major
funding and remittance gaps into the Federation account
The
minister therefore stated that “there is no provision for subsidy in the
2016 Appropriation. The erstwhile PMS Price of N86.50 gives an estimate
subsidy claim of N13.7 per litre which translates to N16.4 billion
monthly. There is neither funding nor appropriation to cover this “.
He
also revealed that the “ renewed insurgency and pipeline vandalism in
the Niger Delta have drastically reduced national crude oil production
to 1.65 million barrels per day, against 2.2 million barrels per day
planned in the 2016 budget, further reducing income to Federation
account and also affecting crude volumes for PMS conversion and
impacting Federal Government’s forex earnings.
“Let me also note
that the resultant fuel scarcity has created an abnormal increase in
price, resulting in Nigerians paying between N150 and N300 per litre as
prevalent hoarding, smuggling and diversion of products have reduced
volumes made available to citizens “.
Lai Muhammed pointed out
that in the absence of available forex lines or crude volumes to
continue massive importation of PMS, it is clear that “unless immediate
action is taken to liberalize the petroleum supply and distribution, the
queues will persist, diversion will worsen and the current prices will
spiral out of control “.
Under the new price regime, the minister
said, “The PPPRA and DPR will be further empowered to ensure a level
playing ground and strict compliance with market rules by all
stakeholders and consumer protection. The liberalization of petrol
supply and distribution will allow marketers and any Nigerian entity
willing to supply PMS to source for their forex and import PMS to ensure
availability of products in all locations of the country”, he stated
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