No Going Back On New Fuel Price Hike –Lai MuhammedFeatured, Latest News, News Friday, May 13th, 2016
BALTIMORE, MD (AFRICAN EXAMINER) – Minister of Information and Culture, Alhaji Lai Muhammed says government will not reverse its decision on subsidy removal which pegs fuel price at N145 per litre.
There has been criticism in several quarters over the sudden fuel subsidy removal and the attendant fuel hike to N145 per litre.
Mohammed who spoke in Lagos today at the inauguration of the Advertising Association of Nigeria (ADVAN) Marketers Conference in Lagos stated that government took the painful decision because of the activities of militants and economic downturn in the country.
“As you are very much aware, a new price regime for Premium Motor Spirit, otherwise known as petrol, was recently announced by the Federal Government. Many have been asking why this would happen at this time and what triggered the decision concerning the new framework for petrol products supply, distribution and pricing.
“I can tell you that that decision is inevitable, if we are to end the crippling fuel scarcity that has enveloped the country, we must ensure the availability of the products and end the suffering that our people have been subjected to.
“With the drastic fall in the price of crude oil, which is the nation’s main foreign exchange earner, there has also been a drastic reduction in the amount of foreign exchange available. The unavailability of forex and the inability to open letter of credit have forced marketers to stop product importation and imposed over 90% supply on the NNPC since October 2015, in contrast to the past where NNPC supplies 48% of the national requirement,” he said.
According to him, “The truth is that the NNPC does not have the resources for, nor is it designed to meet this increase in supply. The result is the crippling fuel situation across the country. Pushed to supply 90 percent of the products required for domestic consumption, the NNPC has continued to utilize crude oil volumes outside the 445,000 barrels/day allocated to it, thereby creating major funding and remittance gaps into the Federation account.”
Muhammed added that since the announcement of the new price regime, many had interpreted it as the removal of subsidy, saying that there is no provision for subsidy in the 2016 Appropriation.
He said the erstwhile PMS price of N86.50 gives an estimate subsidy claim of N13.7 per litre which translates to N16.4 billion monthly as there is neither funding nor appropriation to cover this.
The minister said the renewed insurgency and pipeline vandalism in the Niger Delta had drastically reduced national crude oil production to 1.65 million barrels per day, as against 2.2 million barrels per day planned in the 2016 budget, which further reduced income to Federation account.
Muhammed appealed for understanding and cooperation of the citizens and the various organizations like ADVAN, saying that the problem had also affected crude volumes for PMS conversion and impacting Federal Government’s forex earnings.
“Let me also note that the resultant fuel scarcity has created an abnormal increase in price, resulting in Nigerians paying between N150 and N300 per litre as prevalent hoarding, smuggling and diversion of products have reduced volumes made available to citizens
“In the absence of available forex lines or crude volumes to continue massive importation of PMS, it is clear that unless immediate action is taken to liberalize the petroleum supply and distribution, the queues will persist, diversion will worsen and the current prices will spiral out of control,” he stated.
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