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Petrol Subsidy Removal , A Way Forward – Minister




(AFRICAN EXAMINER) – Subsidy on petrol will soon be withdrawn, Minister of State for Petroleum Timipre Sylva, announced yesterday.

The minister disclosed to reporters that  there is no going back on the decision because the government can no longer afford it.

Sylva explained that although withdrawal of subsidy will be painful initially, it will pay off for the poor in the long run.

According to him, the present arrangement favours a few rich individuals and firms.

Labour yesterday described the plan to remove subsidy as an attempt to punish the people for government’s inefficiency.

The Lagos Chamber of Commerce and Industry (LCCI) said although desirable, government needs a stable policy in the petroleum industry.

The minister lamented that but for the provision of cash from signature businesses from Marginal Oil fields by the Department of Petroleum Resources (DPR), the shortfall in remittance into the Federal Account last month would have been unbearable for the Federation Account Allocation Committee (FAAC).

Not forthcoming on the actual augmentation figure and how long the DPR will continue to intervene, Sylva said: “I cannot say exactly what the figure is. I will have to check with the DPR to get you the figure. Of course, you know that the DPR has always contributed to the federation revenue because they collect royalties and so on

“But as to filling the gap, it will not always be there, it is not as if the Nigerian National Petroleum Corporation (NNPC) has said that after last month, they will not be able to. You may not know when next they will announce it. So, you cannot say that they (DPR) will continue to fill in the gap.

“NNPC announced that they could not make contributions to FAAC and the DPR came to the rescue.

“Luckily the DPR was in the position to step in and the marginal field revenues were used to fill the gap.

Sylva added: “Labour and the Federal Government are not on different pages. Even Labour understands but what we have agreed is that we need to have an alternative and the process of putting it in place is what is ongoing.”

The minister, who spoke to reporters in Abuja, said: “Subsidy removal will come with some pains but the question is, can we continue with petroleum subsidy as a country? If we cannot continue, what options do we have?

“I think the best is  to take out subsidy. From the government of ex-Military President Ibrahim Babangida in the 80s, it has defied all efforts to withdraw petrol subsidy. Diesel is now deregulated, Kerosine is now deregulated but petrol has defied deregulation. Should we continue with this subsidy?

“The Federal Government does not lack courage, our President does not lack political will.

“ Who is really benefitting from subsidy? It is confusing. Some people are benefitting but certainly not the common man. Though it does not really benefit the common man, when you try to remove it, the common man comes out to defend it.

“ Now, can we carry on with subsidy if you consider the amount of money swallowed by subsidy? If you want to carry on with subsidy, how do we get the money to fund it? The best way out is to take out subsidy because if we don’t, we will continue to beg the question,” he said.



“It was practiced for a few months, but when the prices began to move up, some people started threatening  and we had to return to it.

“ This is a democracy and having deregulated for a few months, we had to step back because this government has listening ears,” he said.

“The price differential is a major incentive for smuggling and  it  is very difficult  to police the borders. We must find a way out of it; if not, you will continue to keep your price down in Nigeria while the neighboring countries will continue to feed fat on subsidized fuel from  Nigeria,” he said.

“The PIB is fully on course. We’ve had many meetings with the National Assembly and other stakeholders. Although the National Assembly had earlier promised to pass it in April, but that did not work,  I  believe that the passage will not go beyond June,” he said.

He said the administration of President Buhari had attracted about $16.3billion Foreign Direct Investment (FDI) to the oil and gas sector.

He explained that the Nigeria-Morocco gas pipeline which had been on the drawing board will cost $21billion.

He said the Federal Government will soon disengage from managing refineries.

The refineries will either be handed over to Operation and Management Contractors (O and M) or allow Nigerians to decide if the government should sell them or go public at the stock exchange.

“The refineries in Nigeria have been the weeping babies of the industry but we believe that it is important that they are at least made functional before we can say this is the direction to take.

‘So if you have a dead refinery, how do you sell a corpse? It doesn’t make sense. Some people say no it is a dead refinery, so why are they fixing it? So what am I going to do with it?

“Is it not better for me to at least resuscitate the dead refinery then look for the option of what to do with it? If I sell it, they will say he is selling a dead refinery but now you say let me resuscitate before selling and they say why are you resuscitating it? So whatever you do they will talk.

“The so called dead refineries were sold by the administration of the late President Umaru Yar’Adua, they shouted and it was reversed.

“So now we said this time let’s try and fix it and they said why? So you can see the dilemma.

“What we want to do is ensure that the refineries are functional and when it is, the first thing we want to do is not to run it as a government. We want to put an O and M contractor.

“At some point, we will put out the advertisement for professional refinery managers to bid for managing it.  So,  it  is not going to be subject to government issues anymore when it begins.”


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