FG to earn over N1tr annually from fuel, electricity hike – Petroleum Minister

By Ikechukwu Okaforadi

The Minister of State for Petroleum Resources, Timipre Sylva, has disclosed that the federal government will earn whooping sum more than one trillion naira yearly from the removal of subsidy on Premium Motor Spirit (PMS) and electricity, which has hiked the price of fuel and electricity bill in the country.
Briefing journalists yesterday in Abuja, Silva, who is a chieftain of the APC said the 1 trillion to be gained annually from stoppage of subsidy regime on fuel and electricity would be deployed to fund other critical components of the nation’s economy.
“It is time for Nigerians to face reality and do the right thing. What is deregulation going to do? It is going to free up a lot more money. At least from the very beginning it will save us up to a trillion and more every year.
“Already, we have taken up the budgetary provision for subsidy which is about N500 billion in the budget. Also, we have taken off the excess forex price that special rate that was given to NNPC which also came at a cost. So, all the money that we used to defend the naira at that time to subsidise the dollar will now be freed up for development.
“I believe that this discussion around subsidy has been a vexed issue that has captured the imagination of this country for a long time now. Successive administrations have attempted to deregulate. But sometimes, some administrations lacked the political will and at other times, the time was not good for it.
“And why did I say the time was not good for it? Does that imply the time is good for it now? The problem around deregulation is that people must understand first, that the product we are talking about is a derivative of crude oil. It is refined from crude oil. Therefore, it has a direct relationship with the price of crude oil. If the price of crude oil goes up, then you expect that it would reflect in the price of the derivative.
“So, the best time to achieve this we looked at was the time when crude oil prices are low so that Nigerians will get the benefit of those low prices. In March, when we announced the deregulation, the prices were low and that advantage was transferred to the consumer. So, we brought down the price of petrol. The unfortunate thing is that when we brought down the price of petrol, nobody reacted in the market place.
“The prices were the same. Nobody reduced their prices because price of petrol had reduced. Even bus fares, taxi fares were the same. It did not go down when we reduced the pump price of petrol. We thought that those people in the market; the transport drivers and transport owners would reduce their price. But nobody reduced their prices. But anytime there is even a kobo increase in the pump price of product, you see that people will increase their prices triple fold and four fold.”
On the plan to roll out car conversion next month, the former Bayelsa state governor said: “To give it (Deregulation) a human face, we are introducing an alternative fuel. We are giving auto gas. Gas will now become a fuel for our cars. This programme will be rolled out within the next one month.
“So, if you go to a filling station and you convert your car to dual capability or dual fuel, then you drive into a typical filling station you will find gas LPG, you find CNG and NLG being sold. So, if you look at the price of PMS versus the price of gas and you think that gas is cheaper which of course, it is going to be cheaper.”