The Nigerian government has insisted that it would not reverse decision on removal of subsidy on petrol.
It also explained that the adjustment of tariff on electricity was driven by the need to guarantee efficiency in power supply.
The price of petrol went up from N138.63 to between N162 and N164 per litre last week after the September price modulation.
Power Distribution Companies (DisCos) also adjusted the tariffs.
Nigerians have been lamenting the payment of high rates in the two sectors which are central to their lives.
President Muhammadu Buhari and three ministers at separate fora rose in defence of the decision to end the subsidy regime.
The President spoke through Vice President Yemi Osinbajo at the retreat for ministers.
Three ministers – Lai Mohammed (Information), Timipre Sylva (Petroleum State) and Saleh Mohammed (Power) – spoke at a news conference.
The government also listed some of the measures put in place to prevent Nigerians from being cheated and how to ameliorate the harsh effects of the increased rates.
Buhari said having lost 60 per cent of revenue due to the effects of Coronavirus pandemic, the government had no alternative than to do away with petrol subsidy which it could no longer afford.
The minister of Information puts the amount expanded on petrol subsidy in 13 years at N10.41 trillion.
He added that the Buhari administration expended N1.7 trillion to supplement electricity tariffs shortfalls.
Describing the new price regime in the sectors as “painful”, Mohammed said the government “will not inflict hardship” on Nigerians and promised that “brighter and more prosperous days will come soon.”
He added: “The government can no longer afford to subsidize petrol prices because of its many negative consequences. These include a return to the costly subsidy regime. With 60% less revenues today, we 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. The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good. Of course, there is also no provision for fuel subsidy in the revised 2020 budget because we just cannot afford it.
Cost of Subsidy
“The cost of fuel subsidy is too high and unsustainable. From 2006 to 2019, fuel subsidy gulped N10.413trillion. That is an average of N743.8 billion per annum. “According to figures provided by the NNPC, the breakdown of the 14-year subsidy is as follows: 2006 (N257b); 2007 (N272b); 2008 (N631b); 2009 (N469b); 2010 (N667b); 2011 (N 2.105tn); 2012 (N1.355tn); 2013 (N1.316tn);2014 (N1.217tn); 2015 (N654b); 2016 (Figure Not Available); 2017 (N144.3b); 2018 (N730.86b) and 2019 (N595b).”
He said although the removal of subsidy will come with pains, the government will do its best to mitigate it.
He added: “The Federal Government is not unmindful of the pains associated with higher fuel prices at this time. That is why we will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians. The government is providing cheaper and more efficient fuel in form of auto gas.
“Also, the government, through the PPPRA, will ensure that marketers do not exploit citizens through arbitrarily hike in pump prices. And that is why the PPPRA announced the range of prices that must not be exceeded by marketers.
He gave insights into options weighed by the government before deciding to withdraw the subsidy.
He said with 60 per cent drop in revenues, the government could no longer sustain fuel subsidy.
Mohammed said: ”As you are aware, the long-drawn fuel subsidy regime ended in March 2020, when the Petroleum Products Pricing Regulatory Agency (PPPRA) announced that it had begun fuel price modulation, in accordance with prevailing market dynamics, and would respond appropriately to any further oil market development.
“Recall that the price of fuel then dropped from N145 to N125 per litre, and then to between N121.50 and N123.50 per litre in May.
“With the low price of crude oil then, the cost of petrol, which is a derivative of crude oil, fell, and the lower pump price was passed on to the consumers to enjoy.
“With the price of crude inching up, the price of petrol locally is also bound to increase, hence the latest price of N162 per litre.
“If, perchance, the price of crude drops again, the price of petrol will also drop, and the benefits will also be passed on to the consumers. The angry reactions that have greeted the latest prices of Premium Motor Spirit (PMS) are therefore unnecessary and totally mischievous.
“The truth of the matter is that subsidizing fuel is no longer feasible, especially under the prevailing economic conditions in the country. The government can no longer afford fuel subsidy, as revenues and foreign exchange earnings have fallen by almost 60%, due to the downturn in the fortunes of the oil sector.
“Yet, the government has had to sustain expenditures, especially on salaries and capital projects. Even though we have acted to mitigate the effect of the economic slowdown by adopting an Economic Sustainability Plan, we have also had to take some difficult decisions to stop unsustainable practices that were weighing the economy down.
.The Nation