The federal
government of Nigeria has said the introduction of a new price regime
for premium motor spirit (petrol) has become inevitable in order to halt
the crippling fuel scarcity in the country and ensure availability of
the product.
The minister of information and culture,
Mr. Lai Mohammed, who stated this at the inauguration of the
Advertisers Association of Nigeria (ADVAN) Marketers Conference in Lagos
on Friday, May 13, 2016 said only the liberalization of petrol supply
will ensure the availability of the products.
“Distinguished ladies and gentlemen, I
can tell you that that decision is inevitable, if we are to end the
crippling fuel scarcity that has enveloped the country, ensure the
availability of the products and end the suffering that our people have
been subjected to,” he said.
He said the crash in the price of crude
oil, which has impacted negatively on foreign exchange earnings, has
further compounded the crisis in fuel supply.
“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,” the minister
said.
He further elaborated 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.
Alhaji Mohammed, however, said the
liberalization of petrol supply and distribution will allow marketers
and any Nigerian entity willing to supply petrol to source for their
forex and import petrol to ensure availability of products in all
locations of the country.
He noted 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
tocitizens.
The Minister explained that the new fuel
price regime should not be misconstrued as the removal of subsidy since
there is no provision for subsidy in the 2016 Appropriation, saying the
erstwhile petrol price of N86.50 gives an estimate subsidy claim of
N13.7per litre which translates to N16.4 billion monthly.
“There is neither funding nor appropriation to cover this,” he explained.
Alhaji Mohammed used the occasion to
draw the attention of Nigerians to the renewed insurgency and pipeline
vandalism in the Niger Delta, which 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 thereby reducing
income to Federation account and also affecting crude volumes for PMS
conversion.
Listing the benefits of the new price
regime, he said it would end the recurrent fuel scarcity by ensuring
product availability across the country, reduce hoarding, smuggling and
diversion of products substantially, improves fuel supply situation
through private sector participation, creates labour market stability,
as this 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”.
Alhaji Mohammed gave the assurance that
under the new price regime, the Petroleum Products Pricing Regulatory
Agency (PPPRA) and the Department of Petroleum Resources (DPR) will be
further empowered to ensure a level playing field and strict compliance
with market rules by all stakeholders and consumer protection.
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