As Nigerians grapple with the difficulties occasioned by the artificial scarcity of Premium Motor Spirit and its arbitrary pricing across the country, energy experts yesterday insisted on the need for the Federal Government to remove subsidies being paid on the product.• FG Wastes N667b Yearly Subsidising Unused Fuel• Labour Spoils For War, Prepares For Major Nationwide Protest• Partial Deregulation To Free N1.
This was as some other schools of thought suggested a partial and phased deregulation of the downstream sub-sector of the Nigerian oil industry, an approach estimated to free about N1.1 trillion per annum for government to be used for interventions in other segments of the economy. With debt of about N77 trillion, Minister of Finance, Budget and National Planning, Zainab Ahmed, said this month that the Federal Government was borrowing money to fund PMS subsidies. “Fuel subsidy cost was a very high one; we have been funding it from borrowing,” she said.
Oyebanji disclosed that the lack of uncertainty in the sector has already led to divestments, adding that the industry needs significant investment, which could only come from certainty and full deregulation as well as a level playing field. Iledare also noted that, given the dictates of the Petroleum Industry Act 2021, it is illegal to fix price of PMS. “No power is given to any entity in the PIA 2021 to fix the price of PMS. Government cannot keep breaking its own laws. The reason you have PMS shortages in the system is because of price ceiling, setting the price below the market clearing price,” Iledare said.
“Honestly, the labour unions are myopic in calling upon the government to continue to borrow money to subsidise PMS consumption. It is basically calling on the government to commit economic suicide,” he said. “The problem really is that because corruption has dogged all efforts at fixing our refineries over the years, it defies every logic that we could be a super-producer and still be here talking about the economics of spending nearly a trillion naira in just over two years for just freighting refined products back home for domestic consumption.
“A shift to liberalisation will ensure that fuel prices like other commodity prices will crawl around a long-term trend rather than by fits and jumps that cause significant price shocks in the economy. This will be a lot easier for consumers to adjust to, and less disruptive of economic agents’ budget constraints.
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