Financial Energy Review
by Musa Ibrahim………….
The Minister of State for Petroleum Resources, Timipre Sylva, said that the role of the Federal government in the periodic price monitoring and regulation of the Premium Motor Spirit (PMS) was to ensure that this strategic commodity was not priced arbitrarily by private sector suppliers.
According to him, though the market forces will determine the price of the product but the government will ensure a fair price for the consumers. “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” he said.
Furthermore, he pointed out that the deregulation of the downstream sector and the removal of subsidy were for economic growth and development of the country.
The Minister made this known in a statement in Abuja, on Thursday. Adding that it was unrealistic to continue to subsidise the PMS also known as petrol as it had no economic value.
“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 private sector to takeover the role of supplying Petroleum Products,” he said.
According to him, market forces will, henceforth, determine the price at pump.
This he said, was in line with global best practices, adding that the government would continue to play its traditional role of regulation; to ensure that this strategic commodity was 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,” he added.
Mr Sylva noted that when crude oil prices were down, the government, through its regulatory functions ensured that the benefits of lower Crude Oil prices were enjoyed by Nigerians by ensuring that PMS price was lowered.
He noted that the government at that time indicated that an increase in Crude Oil prices would also reflect at the pump.
“This is a necessary action taken by a responsible government in the overall interest of Nigerians.
Indeed, one of the reasons we have been unable to attract the level of investments we desire into the refining sector has been the burden of fuel subsidy.
“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 noted that in addition to attracting investments and creating jobs and opportunities, the policy direction would free up trillions of naira to develop infrastructure instead of enriching a few.
He said that the government was very mindful of the likely impact higher PMS prices would have on 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 said
