The Federal Government has appealed to organize labour to shelve its planned strike, which can only bring more hardship to ordinary Nigerians, urged Nigerians to bear with the Government, as the full deregulation of the petroleum sector and the service-based electricity tariff adjustmentwill in the long run benefit the ordinary Nigerians.
The Minister of Information and Culture, Alhaji Lai Mohammed made this known on Saturday during the meeting with online publishers in Lagos over the recent increase in petrol and Electricity price, he said government is not insensitive to Nigerians plight.
According to him, “Let’s start with deregulation. Ordinary citizens are not the beneficiaries of the subsidy on petroleum products that has lasted for years. Between 2006 and 2019, a total of 10.4 trillion Naira was spent on fuel subsidy, most of which went to fat cats who either collected subsidy for products they didn’t import or diverted the products to neighbouring countries, where prices are much higher. Instead of subsidy, ordinary Nigerians were subjected to scarcity of petroleum products. They endured incessant long queues and paid higher to get the products, thus making the subsidy ineffectual”.
He added that government can no longer afford the cost of subsidy, especially under the prevailing economic conditions. “Revenues and foreign exchange earnings by the government have fallen by almost 60%, due to the downturn in the fortunes of the oil sector. And there is no provision for subsidy in the revised 2020 budget. So where will the subsidy money come from? Remember that despite the massive fall in revenues, the government still has to sustain expenditures, especially on salaries and capital projects.
“I also want to say that the effect of the changes in the international prices of crude oil on local fuel prices will not last forever. Modular refineries are beginning to come on stream in the country, and this will help lower the cost of petroleum products. Next month, the Waltersmith Modular Refinery in Ibigwe, Imo State, will be commissioned, starting with refining 5,000 barrels of crude per day and increasing rapidly to 50,000 barrels of crude. Many more modular refineries are also in different stages of completion across the country, in addition to the 650,000 barrels per day Dangote Refinery.
The deregulation will bring more investments into the sector, to the benefit Nigerians”, he said On electricity tariffs, he explained that due to the problems with the largely-privatized electricity industry, the government has been supporting the industry. “To keep the industry going, the government has so far spent almost 1.7 trillion Naira, especially by way of supplementing tariff shortfalls. The government does not have the resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatized, will be grossly irresponsible.
“But in order to protect the large majority of Nigerians who cannot afford to pay cost-reflective tariffs from increases, the industry regulator, Nigerian Electricity Regulatory Commission (NERC), 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 with guaranteed minimum of 12 hours of electricity can have their tariffs adjusted. Those who get less than 12 hours supply will experience no increase”, he said.
Alhaji Lai noted that the deregulation of PMS prices was announced on 18 March 2020, and the price modulation that took place at the beginning of this month was just part of the on-going monthly adjustments to global crude oil prices. Also, 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.
“Like Mr. President said at the opening of the last Ministerial Retreat, this government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we face as 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.