Deregulation of PMS prices will help avert negative consequences — Buhari

Deregulation of PMS prices will help avert negative consequences — Buhari

President Muhammadu Buhari says there will be negative consequences if the government continued with the business of fixing or subsidising the prices of Premium Motor Spirit (PMS) known as petrol.


The President, who was represented by Vice President Yemi Osinbajo, said this in Abuja on Monday, while declaring open a two-day First Year Ministerial Performance Review Retreat at the State House Conference Centre.


Buhari said that the COVID-19 pandemic had led to a severe downturn in the funds available to finance the nations’ budget, while severely hampering the government’s capacity as well.


He said that one of the steps, which the government took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown, was the deregulation of PMS prices.


He, however, said that the government was working toward mitigating the impact of the deregulation on the citizens.


“There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising PMS prices.


“First of all, it would mean a return to the costly subsidy regime; today, we have 60 per cent less revenues; we just cannot afford the cost.


“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration.


“Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices; also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget.


“This is simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services,’’ he said.


The president said that government was extremely mindful of the pains which higher prices meant at this time.


He said that the government did not take the sacrifices which all Nigerians had to make for granted.


“We will continue to seek ways and means of cushioning the pains, especially for the most vulnerable in our midst.


“We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.


“This is the role that government must now play through the Petroleum Products Pricing Regulatory Agency (PPPRA).


“This explains why the PPPRA made the announcement a few days ago, setting the range of prices that must not be exceeded by marketers.


“The advantage we now have is that anyone can bring in petroleum products and compete with marketers; that way, the price of petrol will be keep coming down.’’


Besides, Buhari said that the recent service-based tariff adjustment by the Electricity Distribution Companies (Discos) had also been a source of concern for his government.


He said that like many Nigerians, he had been unhappy with the quality of service which the Discos provided but there had been many constraints, including poor electricity transmission and distribution capacity.


He said that he had already approved the first phase of the Siemens project to address many of these issues.


“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry.


“So far to keep the industry going, we have spent almost N1.7 trillion, especially by way of supplementing tariff shortfalls.


“We do not have the resources at this point to continue in this way, and it will be grossly irresponsible to borrow to subsidise electricity generation and distribution, which are both privatised.


“But we also have a duty to ensure that the large majority of those who cannot afford to pay cost-reflective tariffs are protected from increases.’’


Buhari said that the Nigerian Electricity Regulatory Commission (NERC), the industry regulator, had approved tariff adjustments but only on the basis of guaranteed improvement in service.


He said that under the new arrangement, only customers who were guaranteed a minimum of 12 hours of power supply and above could have their tariffs adjusted.


Buhari said that those who got less than 12 hours supply, or the Band D and Band E customers, must be maintained on lifeline tariffs, meaning that they would experience no tariff increase.


“This is the largest group of customers; government has also taken notice of the complaints about arbitrary estimated billing.


“Accordingly, a mass metering programme is being undertaken to provide meters for over five million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process,’’ he said.


He said that the N2.3 trillion Economic Sustainability Plan (ESP) consisted of fiscal, monetary and sectoral measures to enhance local production, support businesses, retain and create jobs and provide succour to Nigerians, especially the most vulnerable.


Earlier in his opening address, Mr Boss Mustapha, the Secretary to the Government of the Federation, said that the retreat was expected to provide an opportunity for the government to review the First-Year report of the Ministerial Mandates.

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