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Minister: No petrol price increase in June

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Despite pressure, the Federal Government, Friday, said it would not increase the price of Premium Motor Spirit, PMS, in June 2021 in order not to disrupt ongoing engagement with labour.

The Nigeria Governors’ Forum, NGF, had in their virtual meeting, Wednesday, considered the report of a committee headed by Kaduna State Governor, Mallam Nasir el-Rufai, and accepted its recommendation backing full deregulation of petrol price, which has been rising due mainly to the relatively high price of crude oil in the global market.

The forum which puts the pump price of the product at N385 per litre had also recommended that the federal government should buy 113 buses to cushion the effects of the price increase.

But in a statement obtained by newsmen, Friday, the Minister of State for Petroleum, Chief Timipre Sylva, stated: “Once again, it has become necessary to assure Nigerians that despite the burden of under-recovery, the Federal Government is not in a hurry to increase the price of Premium Motor Spirit (petrol) to reflect current market realities.

“The current price of petrol will be retained in the month of June until the ongoing engagement with organized labour is concluded.

“This clarification becomes necessary in the light of recent reports regarding the resolution of the Nigeria Governors Forum to increase the pump price of petrol.”

He added: “In this regard, I would like to strongly urge petroleum products marketers not to engage in any activities that could jeopardize the seamless supply and distribution system in place while calling on members of the public to avoid panic buying because the Nigerian National Petroleum Corporation has enough stock of petroleum products to keep the nation wet.”

However, in different interviews with newsmen, Friday, some experts, labour, and Non-Governmental Organisations, NGOs, expressed divergent views on the subject.

For instance, Executive Director, Spaces for Change, Victoria Ibezim-Ohaeri, said: “The rising call for the full deregulation of the petroleum sector deserves rigorous scrutiny. The expected kick-off of a privately-owned refinery is being touted as Nigeria’s passport to end products’ importation, reducing foreign exchange demand for fuel imports, while serving as a shortcut for the wider oil sector reforms. There have also been calls made to insert certain clauses in the petroleum reform bill— Petroleum Industry Bill—mandating the grant of import licenses to only companies with active refining licenses.

“Calls have also been made to encourage investment in local refining by granting dominant refining licensing status efforts to certain business players. Underneath these calls lay the foundation for a market monopoly, including multiple layers of barriers to economic freedoms, which make it harder for smaller companies to compete in the petroleum industry in the future.

“All of these hint at an urgent need for an in-depth inquiry into the current regulatory prescriptions in order to check whether there are any potential barriers to the competitive landscape that might affect the oil and gas industry and inhibit the economic freedom of citizens. Nigeria should take it easy and slowly with the plans for full deregulation of the sector. There seem to be so many landmines underneath that call.”

Nevertheless, Chairman, Major Oil Marketers Association of Nigeria, MOMAN, Tunji Oyebanji, said: “We have been saying it and it has always been an issue. Like the many issues in the country, if we don’t have the will to do something at the appropriate time, the situation will force itself on us eventually. That is what has happened to us at the moment.

“I will not say it’s good or not good. we are all citizens of Nigeria and this is where we find ourselves at the moment.

“Governors’ realisation that the current situation is not sustainable is a welcome development. However, that desire has to be translated into action. We await further reactions from the government on the subject, remember government says they are still discussing with labour who are opposed to deregulation at the moment.

“So for now we see the Governor’s statement as only an acknowledgment and a wish until the policy steps are legally put in place.

“On labour, I will only say they have been taking this position for the last 25 years and it’s about time they take a different track. The country can no longer afford the subsidy. If it is not removed many of the states that depend on Federal Allocation may soon collapse with many workers losing their jobs.

“So they need to have a rethink. They were also against the privatization of the refineries, now they are complaining that the refineries are not working. So sometimes what is popular is not always economically viable and sustainable.

“As to benefits of deregulation, we have repeated this many, many times and there is no need to repeat ourselves. In any case, it is no longer a matter of choice but an imperative for survival. If you doubt let’s wait and see what happens if we continue in the way we are going.”

On plight to Nigerians, he said: “We would have to adjust our lifestyle. for individuals when there are changes we should adjust. For Nigerians, we like to enjoy without rational thinking. When people are saying we would suffer, yes it will happen if we don’t adjust our spending habits.”

On the benefits, Mr. Oyebanji explained that full deregulation of the downstream sector would set Nigeria ahead of other African economies in the area of local petroleum products refining as against exporting crude oil for refining.

He listed other benefits to be expected from the process as; “alignment with the Nigeria National Petroleum Policy, construction and maintenance of refineries, product availability in the country and for export, increased foreign exchange earnings, including transforming the country into a centre for innovation and technology.

He added: “Others are the growth of local refining capacity, leading Nigeria to become a net exporter of refined petroleum to West and Central Africa, and meeting local, regional demands and earning Nigeria increased foreign exchange, a win-win for the Nigerian consumer, industry stakeholders and the country, importation of PMS by marketers can resume, freeing the Federal Government from the unsustainable cost and increasing debt the burden associated with a regulated pricing system.”

Furthermore, Professor Wumi Iledare, Ghana National Petroleum Corporation, GNPC Professor & Chair in Petroleum Economics & Management, Institute for Oil and Gas Studies, Cape Coast, Ghana, said: “There can be no deregulation without the Petroleum Industry Bill, PIB becoming an Act. Another populist president can always come and revert back using the PA1969 as amended.

“Meanwhile, this is being pragmatic as we await the implementation of PIB. A partial and gradual decontrol will ameliorate the shock on Nigeria’s economy.

“Going from N162 to N385 per litre may create disequilibrium beyond the sharp rise in the exchange rate. So let NNPC continue at a lower price only in NNPC filling stations for public transporters only with a sunset in place. Of course, it pre-supposes integrity in the avoidance of round-tripping.

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