Minister of State for Petroleum Resources, Chief Timipre Sylva, said it’s unrealistic for the government to continue subsidising the Premium Motor Spirit (PMS) otherwise known as petrol.
The Minister said the subsidy has become a burden on the government year-in-year-out, adding it has no economic value as it only benefits a few rich people in the country.
Sylva explained that deregulation of the downstream oil sector was to ensure economic growth and development of the country.
In a statement in Abuja on Thursday, the minister urged Nigerians to ignore recent misguided comments and innuendos on the issue.
“It has become expedient for the Ministry of Petroleum to explain misconceptions around the issue of Petroleum Products Deregulation.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the government 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 the subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians.
“Deregulation means that the Government will no longer continue to be the main supplier of Petroleum Products, but will encourage the private sector to take over the role of supplying Petroleum Products,” he said.
According to him, market forces will henceforth determine the price at the pump.
This, he said was in line with global best practices adding that government would continue to play its traditional role of regulation; to ensure that the strategic commodity was 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.
“Petroleum Products are refined from Crude Oil. Therefore the price of Crude (the feedstock) for the refining process will affect the price of the refined product,” he added.
Sylva noted that when Crude Oil prices were down, government, through its regulatory functions ensured that the benefits of lower Crude Oil prices were enjoyed by Nigerians by ensuring that PMS price was lowered.
