The Minister of State for Petroleum Resources, Timipre Sylva, on Thursday, said the Federal Government (FG) had at no time promised a reduction in fuel prices.
This was even as he stated that the government cannot continue with subsidising the Premium Motor Spirit(PMS) as this was unrealistic.
This was according to a statement signed by the minister who explained that deregulation of the sector was aimed at encouraging more private sector investment in the area of supply of petroleum products.
He said: “We can no longer avoid the inevitable and expect the impossible to continue. There was no time the government promised to reduce pump price and keep it permanently low.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the FG concluded that it was unrealistic to continue with the burden of subsidising 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 explained that due to deregulation of the sector, pump prices would now be determined by market forces while the FG will continue to play its regulatory functions.
According to him, because petroleum products are refined from Crude Oil, the refining process will affect prices of the refined product.
“This means also 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; a regulatory function not unlike the role played by the Central Bank of Nigeria in the banking sector; ensuring that commercial banks do not charge arbitrary interest rates.
“When Crude Oil prices were down, the 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 the increase in Crude Oil Prices will also reflect at the pump,” he said.
He noted that fuel subsidy has hindered the country from attracting the desired level of investment in the refining sector.
“We need to free up that investment space so that what happened in the banking sector, the aviation sector and other sectors can happen in the midstream and downstream sector,” he added.