FUEL SUBSIDY NOT SUSTAINABLE, F.G SET TO INCREASE PUMP PRICE OF PETROL IN THE COUNTRY- MELE KYARI.

MELE KYARI, NNPC GROUP MANAGING DIRECTOR

The Federal Government yesterday admitted paying as much as N120 billion to subsidize the price of petrol monthly. This was disclosed by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, at the fifth edition of the special ministerial briefings coordinated by the presidential communications team, the event held at the presidential villa, Abuja. Kyari said the sum expended monthly is higher than the N70 billion the government budgeted for the provision of Universal Basic Education (UBEC) in the 2021 budget, as well as the N45.19 billion allocated for immunization. For selling Premium Motor Spirit (PMS) otherwise called petrol at N162 per liter instead of the current landing price of N234 for a liter, the Federal Government says it is now paying as much as N120 billion monthly to subsidize the estimated 60 million liters of petrol the country consumes daily. This is coming as the NNPC, the government agency bearing the burden of the subsidy, insisted that the pump price of the product will remain N162 per liter in the month of April to allow government dialogue with the organized labor on the situation. Despite the assurance, the Group MD, Kyari, has insisted that price would inevitably increase, stressing that market forces must be allowed to determine the pump price of petrol in the country. Kyari said:  “Our current consumption is — evacuation from our depots about 60 million liters, per day. We are selling at N162 to the liter. Current market price is N234, the actual market price today. The difference between the two, multiply by 60 million times thirty, will give you the real price per month. If you want exact figures from our book, I do not have them from this moment but it’s between N100 billion and N120 billion per month. We cannot continue to bear this.”

Stakeholders in the industry, while insisting that the government may be embarking on an economically devastating mission with the continuous drama on the pump price of petrol, said sustaining N120 billion monthly subsidies was not sustainable.  The current crisis followed an exit from the payment of subsidy, which was announced in March last year and eventual deregulation of the downstream sector. Under the arrangement, the control of pump price is expected to be determined by market forces, especially crude oil price and foreign exchange. Labor unions, especially the Nigerian Labor Congress (NLC) and the Trade Union Congress (TUC), which couldn’t stand the speed at which the pump price was heading as crude oil price rebalances at the international market, had held government by the throat after succeeding in reducing the price from N167 to N162 per liter last year. The increase in the price of crude oil at the international market, which should have been a good development for the implementation of the 2021 budget, became a curse with a direct consequence on the pump price of petrol since the exchange rate and the international crude price determines the pump price locally. Organized labor had returned to its earlier position after Minister of State for Petroleum Resources, Timipre Sylva and Kyari hinted of a price increase in late January. Since then, government had backpedalled on a liberal market, thereby bringing back subsidy payment, which has always been marred by corruption. Energy watchers had, however, raised concerns that the government had once again jeopardized the attempt to deregulate the downstream sector of the petroleum industry, crippling budget implementation and hindering the growth of the Excess Crude Account. They also raised concern over the sustainability of subsidy given the current state of the country’s economy, especially the continuous borrowing to finance the system.

Fresh facts have emerged why the Petroleum Products Pricing Regulatory Agency (PPPRA) might not publish the monthly price template in April. There are fears amongst the staffers owing to the denial of the Minister of State for Petroleum Resources, Timipre Sylva, that neither he nor President Muhammadu Buhari authorized the March 12,2021 publication of a new template. The agency came under attacks weeks ago when it released a template indicating a huge jump in the retail price of petrol from about N160 to N212. The decision contradicted earlier assurances by the NNPC that there will be no increment in March, prompting the government to disown it and apologize. Irrespective of the ‘politics’ involved in the determination of pump price, the NLC President, Ayuba Wabba, in Abuja last night said labor will remain true to the working class of Nigeria on the pump price of petroleum. Wabba argued that the Federal Government cannot remove subsidy without giving Nigerians a substitute. “Everywhere in the world, governments are giving palliatives to their citizens as a result of the pandemic. The pandemic has ravaged not only economies but families and the working people of the world. Why is it that it is this time that the Federal Government is contemplating removing subsidy? Our negotiations do not include removal of subsidy without palliatives. How can Nigerians cope with life? Inflation is rising at an alarming rate with prices of items hitting the roof. The unemployment rate is about the highest in the nation’s history. Why is the government in place? Our position has been very consistent. Increasing the price of petrol will have negative impacts on the lives of Nigerians,” Wabba said. He added that the organized labor has consistently urged the government to revive the refineries, saying, “our refineries are not scraps; they are among the newest in the world.” Wabba insisted that the move to increase the pump price has not been brought to the notice of the organized labor. To the Acting General Secretary of NLC, Ismail Bello, the government is making a pronouncement on price increment to test the waters before taking the action.

  1. http://www.wakeupafrica360.com
  2. Follow us on twitter: @wakeupafrica360
  3. Follow us on Instagram: @wakeupafrica360
  4. Subscribe to our YouTube channel @WAKEUPAFRICA360TV

This site uses Akismet to reduce spam. Learn how your comment data is processed.