By Emmanuel Addeh
The Minister of State for Petroleum Resources, Mr. Timipre Sylva, yesterday took a swipe at persons and organisations mounting opposition against the recent hike in the prices of petrol, describing the reactions to the increase as misguided.
In a statement issued in Abuja, the minister emphasised that the federal government never promised that low fuel prices will stay forever, insisting that Nigeria had been unable to attract investment to the oil and gas sector because of the burden of fuel subsidy.
He argued that the government needed to free up the investment space so that what is happening in the aviation and banking sectors could also be obtained in the petroleum industry.
Describing the resistance to the new pump prices of N43.80 as that of ‘unscrupulous middlemen,’ who would want the status quo to remain, the minister maintained that the current deregulation of the downstream sector would free up trillions of naira to invest in infrastructure.
According to him, the impact of the increase in prices would be mitigated when the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at lower costs come on-stream.
“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” the statement personally signed by Sylva, said.
Sylva added: “In view of recent misguided comments and innuendos, 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 petrol for domestic consumption, the federal government concluded that it was unrealistic to continue with the burden of subsidising it 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.
“Deregulation means that the government will no longer continue to be the main supplier of petroleum products. But will encourage private sector to take over the role of supplier of petroleum products.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, government will continue to play its traditional role of regulation; 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” he said.
The minister explained that petroleum products are refined from crude oil, adding that the price of crude 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 petrol was lowered. At that time, we indicated that increase in crude oil prices will also reflect at the pump,” he noted.