Timipre Sylva, Minister of State for Petroleum Resources, has said the Federal Government did not promise to keep the pump price of Premium Motor Spirit (PMS), also known as petrol, low.
He said this in a statement published on the ministry’s Instagram page on Thursday, The Punch reports.
Sylva said the government could no longer bear the burden of subsidy, hence its decision to deregulate. He said the government would no longer be the main supplier of petroleum products but will rather allow the private sector take over the role.
He said the government would play a regulatory role, comparing it to the function of the Central Bank of Nigeria in the banking industry.
“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 subsidising 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,” he said.
“This means also that market forces will henceforth determine the prices at the pump. In line 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.”
“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 an increase in crude oil prices will also reflect at the pump.”
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“We need to free up that investment space so that what happened in the banking sector, the 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.”