….Says subsidy unsustainable ….COVID-19 adversely hampered our revenue sources – Buhari
By Lateef Ibrahim & Mashe Umaru Gwamna, Abuja
The Federal government disclosed on Monday that fuel subsidy gulped 10.413 Trillion Naira between 2006 and 2019 at an average of 743.8 billion per annum, declaring that the figure is too high and unsustainable.
The Minister of Information and Culture, Alhaji Lai Mohammed made the disclosure at a joint press conference he addressed along with the Minister of State for Petroleum Resources, Chief Timipre Silver and his counterpart in Power Ministry, Mr Saleh Mamman.
Alhaji Mohammed, who stated that the Federal Government is not unmindful of the pains associated with higher fuel prices at this time in the country, assured that government will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians.
The government, he said, will also, through the PPPRA, ensure that marketers do not exploit citizens through arbitrarily hike in pump prices, stating that that is why the PPPRA announced the range of prices that must not be exceeded by marketers
The Minister, who refused to answer the questions posed to him by journalists at the press conference, said, “The cost of fuel subsidy is too high and unsustainable.
“From 2006 to 2019, fuel subsidy gulped 10.413 Trillion Naira.
“That is an average of 743.8 billion Naira per annum”, he said.
Relying on figures provided by the Nigeria National Petroleum Corporation, NNPC, Alhaji Mohammed gave the breakdown of the 14-year subsidy is as follows 2006 ( 257bn), 2007 ( 272bn), 2008 (631bn), 2009 (469bn), 2010 (667bn), 2011 (2.105tn), 2012 (1.355tn), 2013 (1.316tn) and 2014 (1.217tn).
The rest are; 2015 (654bn), 2016 (Figure Not Available), 2017 (144.3bn), 2018 (730.86bn) and 2019 (595bn)
The Minister said, “the cost of fuel subsidy is too high and unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413 Trillion Naira. That is an average of 743.8 billion Naira per annum.
“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.
“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, 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.
“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”, he said.
The Minister equally stated that the review of service-based electricity tariffs was scheduled to start at the beginning of July 2020 but was put on hold so that further studies and proper arrangements can be made.
Alhaji Mohammed, while quoting what President Muhammadu Buhari said at the retreat for Ministers yesterday in Abuja, stated, “this government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we faceas a nation.
“We certainly will not inflict hardship on our people. But we are convinced that if we stay focused on our plans, brighter and more prosperous days will come soon”, he said.
President Muhammadu Buhari had earlier disclosed the reasons for the recent increase in petrol pump price and electricity tariff across the country.
Buhari who was represented by Vice President, Yemi Osinbajo, stated this on Monday at the ministerial performance review retreat, attributed the Covid-19 pandemic as the cause of the pandemic.
He said: “The COVID-19 pandemic has led to a severe downturn in the funds available to finance our budget and has severely hampered our capacity. One of the steps we took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown was the deregulation of the price of Premium Motor Spirit such that the benefit of lower prices at that time was passed to consumers.
“This was welcome by all and sundry. The effect of deregulation though is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover, we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally will also go up.
“There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising PMS prices. First of all, it would mean a return to the costly subsidy regime. Today we have 60 per cent less revenues; 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.
“We do not have the resources at this point to continue in this way and it will be grossly irresponsible to borrow to subsidise a generation and distribution which are both privatised. But we also have a duty to ensure that the large majority of those who cannot afford to pay cost reflective tariffs are protected from increases. NERC, the industry regulator, therefore approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.”