The President, Major General Muhammadu Buhari (retd.), on Monday, said any attempt by his regime to return to the era of subsidising Premium Motor Spirit, popularly known as petrol, would lead to “several negative consequences.”
Buhari said this at the opening of the First Year Ministerial Performance Review Retreat at the Presidential Villa, Abuja.
According to him, one of the dangers of retaining fuel subsidy is the return to the era of long queues at filling stations where Nigerians spent days and nights before they could buy petrol.
But in their separate reactions, the Trade Union Congress and the Academic Staff Union of Universities faulted the President, saying his regime should fulfil its promise to repair the country’s refineries.
Following the economic downturn caused by the COVID-19 in March, the Federal Government deregulated the downstream sector of the nation’s oil and gas sector, allowing petrol prices to be determined by market forces.
In March, the government reduced the pump price of petrol from N145 per litre to N125 per litre following the collapse of global oil prices.
But in the last three months, the pump price of petrol has increased. Last week, marketers adjusted their pump prices to between N158 and N162 from N148 to N150 in August.
The scarcity of the petrol, especially in December and January, had rocked the country for many years, causing long queues of desperate motorists at filling stations.
Following the severe fuel scarcity, the country experienced in the first quarter and parts of the second quarter of 2016, the Federal Government on May 11, 2016 increased the petrol price to N145 per litre from N86, putting an end to fuel subsidy to marketers, in what was described as partial liberalisation of the sector.
Buhari, who was represented by Vice-President Yemi Osinbajo at ministerial retreat, said one of the effects of deregulation which his regime adopted at the beginning of the COVID-19 lockdown in March and when global oil prices collapsed was that PMS prices would change with changes in global oil prices.
Explaining the increase in fuel price, Buhari said when global prices rose, it led to increase in the price of petrol locally.
The President said, “There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising the PMS price.
“First of all, it would mean a return to the costly subsidy regime. Today, we have 60 per cent less revenue, we just cannot afford the cost.
The second danger is the potential return of fuel queues – which has thankfully, become a thing of the past under this administration.
Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices.
“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services.”
Buhari, however, assured Nigerians that his regime was mindful of the pains that higher prices meant, saying their sacrifices were not being taken for granted.
He said, “We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.”
Buhari also said he was disappointed with the services of the nation’s power distribution companies.
He said his regime had spent N1.7tn to supplement tariff shortfalls.
He said this could no longer continue.
Buhari said, “Let me say frankly that like many Nigerians, I have been very unhappy about the quality of service given by the Discos, but there are many constraints including poor transmission capacity and distribution capacity.
“I have already signed off on the first phase of the Siemens project to address many of these issues.
“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry.
“So far, to keep the industry going we have spent almost N1.7tn, especially by way of supplementing tariffs shortfalls.”
He said the hike in electricity tariffs would be based on improved power supply.
“The NERC (Nigerian Electricity Regulatory Commission), the industry regulator, has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.
Under this new arrangement, only customers who are guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted.
“Those who get less than 12 hours supply, or the B and D and E customers must be maintained on lifeline tariffs, meaning that they will experience no increase. This is the largest group of customers.”
Buhari said his regime had also taken notice of the complaints about arbitrary estimated billing.
Accordingly, he said a mass metering programme was being undertaken to provide meters for over five million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process.
The President added that the NERC had committed to strictly enforcing the capping regulation which would ensure that unmetered customers were not charged beyond the metered customers in their neighbourhood.
Buhari described as coincidental the timing of the adjustments in price of petrol and power tariff.
“It is important to stress that this is coincidental in the sense that the deregulation of PMS prices happened quite some time ago, it was announced on March 18, 2020 and the price moderation that took place at the beginning of this month was just part of the ongoing monthly adjustments to global crude oil prices.
Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.
The President said his administration adopted a N2.3trn Economic Sustainability Plan to mitigate the effect of the economic slowdown.
The Secretary to the Government of the Federation, Boss Mustapha, in his welcome remark, said the retreat would help the government to address the country’s current economic challenges, and consolidate on achievements.