FG didn't pledge to keep petrol price low - Minister
The Minister of State for Petroleum Resources, Timipre Sylva has said the Federal Government did not at any point make a promise to keep the pump price of Premium Motor Spirit (petrol) permanently low.
Speaking via a statement which was published on Thursday on the ministry's Instagram page titled, "Deregulation: The facts and the reasons behind policy", he said the government had concluded it could no longer bear the burden of the petrol subsidy.
"After a thorough examination of the economics of subsidizing PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidizing 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.
He said deregulation means the government will no longer continue to be the major supplier of petroleum products but will encourage that the private sector takes over the role of supplying the products.
"This also means 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", he said.
He further said, "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 would also reflect at the pump".
He said one of the reasons the country had been unable to attract the desired level of investments into the refining sector had been the burden of fuel subsidy.
He said, "We need to free up that investment space so that what happened in the banking sector, the aviation sector and other sectors can occur 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".
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