Information and Culture, Lai Mohammed.
The Minister of Information and Culture, Lai Mohammed,
has defended the decision of the government to increase the price
of Premium Motor Spirit (PMS), also known as petrol.
He attributed the increased amount to the global price of crude
oil, saying the “angry reactions” that have greeted the latest
petrol price were “unnecessary and totally mischievous”.
Mohammed made the remarks on Monday at a press conference in
Abuja on the recent increases in petrol price and electricity
tariff.
He explained that with the price of crude creeping up, petrol
price was equally bound to increase, hence the latest price of N162
per litre.
The minister, however, believes if the price of crude drops
again, the price of petrol will also drop and the benefits will
also be passed on to the consumers.
He stressed that despite the recent increase in the price of
petrol, that of Nigeria has remained the lowest in the West and
Central African sub-regions.
According to Mohammed, petrol is being sold for N211 per litre
and N168 per litre in Egypt and Saudi Arabia respectively.
On the hike in electricity tariff, he described the increase as
a service-based adjustment by the Distribution Companies
(DISCOS).
The minister stated that due to the problems with the
largely-privatised electricity industry, the Federal Government has
been supporting the sector.
He said while the government has so far spent almost N1.7
trillion, especially by way of supplementing tariffs shortfalls and
does not have the resources to continue, borrowing to subsidise
generation and distribution which have been privatised would be
grossly irresponsible.
petrol at N162 per litre.
Read the minister’s full remarks at the press briefing
below:
TEXT OF THE PRESS CONFERENCE ADDRESSED BY THE HON MINISTER OF
INFORMATION AND CULTURE, ALHAJI LAI MOHAMMED, IN ABUJA ON MONDAY, 7
SEPT. 2020 ON THE RECENT INCREASES IN PETROL AND ELECTRICITY
PRICESPROTOCOL
Gentlemen of the press, good afternoon, and thank you for
honouring our invitation to this press conference, which we have
called to address the recent issues surrounding the price of fuel
and electricity tariff.FUEL PRICES
- As you are aware, the long-drawn fuel subsidy regime ended in
March 2020, when the Petroleum Products Pricing Regulatory Agency
(PPPRA) announced that it had begun fuel price modulation, in
accordance with prevailing market dynamics, and would respond
appropriately to any further oil market development.- Recall that the price of fuel then dropped from 145 to 125
Naira per litre, and then to between 121.50 and 123.50 Naira per
litre in May. With the low price of crude oil then, the cost of
petrol, which is a derivative of crude oil, fell, and the lower
pump price was passed on to the consumers to enjoy.With the price of crude inching up, the price of petrol locally
is also bound to increase, hence the latest price of 162 Naira per
litre. If perchance, the price of crude drops again, the price of
petrol will also drop, and the benefits will also be passed on to
the consumers.The angry reactions that have greeted the latest prices of
Premium Motor Spirit (PMS) are therefore unnecessary and totally
mischievous.
- Gentlemen, the truth of the matter is that subsidizing fuel is
no longer feasible, especially under the prevailing economic
conditions in the country.The government can no longer afford fuel subsidy, as revenues
and foreign exchange earnings have fallen by almost 60%, due to the
downturn in the fortunes of the oil sector. Yet, the government has
had to sustain expenditures, especially on salaries and capital
projects.Even though we have acted to mitigate the effect of the economic
slowdown by adopting an Economic Sustainability Plan, we have also
had to take some difficult decisions to stop unsustainable
practices that were weighing the economy down.
- One of such difficult decisions, which we took at the beginning
of the Covid-19 pandemic in March – when oil prices collapsed at
the height of the global lockdown – was the deregulation of the
prices of PMS.As I said earlier, the benefit of lower prices at that time was
passed to consumers. Everyone welcomed the lower fuel price then.
Again, the effect of deregulation is that PMS prices will change
with changes in global oil prices.This means quite regrettably that as oil prices recover, there
will be some increases in PMS prices. This is what has happened
now.
- Government can no longer afford to subsidize petrol prices,
because of its many negative consequences. These include a return
to the costly subsidy regime. With 60% less revenues today, we
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.The days in which Nigerians queue for hours and days just to buy
petrol, often at very high prices, are gone for good. Of course,
there is also no provision for fuel subsidy in the revised 2020
budget, because we just cannot afford it.
- Gentlemen, the cost of fuel subsidy is too high and
unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413
Trillion Naira. That is an average of 743.8 billion Naira per
annum.According to figures provided by the NNPC, the breakdown of the
14-year subsidy is as follows:– In 2006 Subsidy was
257bn– In 2007 Subsidy was
272bn
(adsbygoogle = window.adsbygoogle || []).push({});– In 2008 Subsidy was
631bn– In 2009 469bn
– In 2010 667bn
– In 2011 2.105tn
– In 2012 1.355tn
– In 2013 1.316tn
– In 2014 1.217tn
– In 2015 654bn
– In 2016 Figure Not
Available– In 2017 Subsidy was 144.3bn
– In 2018 730.86bn
– And in 2019 Subsidy was 595bn
- The Federal Government is not unmindful of the pains associated
with higher fuel prices at this time. That is why we will continue
to seek ways to cushion the pains, especially for the most
vulnerable Nigerians.The government is providing cheaper and more efficient fuel in
form of autogas. Also, Government, through the PPPRA, will ensure
that marketers do not exploit citizens through arbitrarily hike in
pump prices.And that is why the PPPRA announced the range of prices that
must not be exceeded by marketers.9 In spite of the recent increase in the price of
fuel to 162 Naira per litre, petrol prices in Nigeria remain the
lowest in the West/Central African sub-regions.Below is a comparative analysis of petrol prices in the
sub-regions (Naira equivalent per litre);–
Nigeria
– 162 Naira per litre–
Ghana
– 332 Naira per litre–
Benin
– 359 Naira per litre–
Togo
– 300 Naira per litre–
Niger
– 346 Naira per litre–
Chad
– 366 Naira per litre–
Cameroon
– 449 Naira per litre– Burkina Faso – 433
Naira per Litre–
Mali
– 476 Naira per litre–
Liberia
– 257 Naira per litre– Sierra Leone – 281
Naira per litre–
Guinea
– 363 Naira per litre–
Senegal
– 549 Naira per litre
- Outside the sub-region, petrol sells for 211 Naira per litre in
Egypt and 168 Naira per litre in Saudi Arabia.You can now see that even with the removal of subsidy, fuel
price in Nigeria remains among the cheapest in Africa.ELECTRICITY TARIFF
- Another issue we want to address here today is the recent
service-based electricity tariff adjustment by the Distribution
Companies or DISCOS.The truth of the matter is that due to the problems with the
largely-privatised electricity industry, the government has been
supporting the industry.To keep the industry going, the government has so far spent
almost 1.7 trillion Naira, especially by way of supplementing
tariffs shortfalls. The government does not have the resources to
continue along this path.To borrow just to subsidise generation and distribution, which
are both privatized, will be grossly irresponsible.
- But in order to protect the large majority of Nigerians who
cannot afford to pay cost-reflective tariffs from increases, the
industry regulator, NERC, has approved that tariff adjustments had
to be made but only on the basis of guaranteed improvement in
service.Under this new arrangement, only customers with guaranteed
minimum of 12 hours of electricity can have their tariffs adjusted.
Those who get less than 12 hours supply will experience no
increase.This is the largest group of customers.
- Government has also noted the complaints about arbitrary
estimated billing. Accordingly, a mass metering programme is being
undertaken to provide meters for over 5 million Nigerians, largely
driven by preferred procurement from local manufacturers, and
creating thousands of jobs in the process.NERC will also strictly enforce the capping regulation to ensure
that unmetered customers are not charged beyond the metered
customers in their neighbourhood. In other words, there will be no
more estimated billings.
- The government is also taking steps to connect those Nigerians
who are not even connected to electricity at all. As you are aware,
under its Economic Sustainability Plan, the government is providing
solar power to 5 million Nigerian households in the next 12
months.This alone will produce 250,000 jobs and impact up to 25 million
beneficiaries through the installation, thus ensuring that more
Nigerians will have access to electricity via a reliable and
sustainable solar system.
- Gentlemen, please note that despite the recent service-based
tariff review, the cost of electricity in Nigeria is still cheaper
or compares favourably with that of many countries in Africa.COST IN NAIRA PER KWH IN SOME AFRICAN COUNTRIES.
–
Nigeria
49.75– Senegal
71.17–
Guinea
41.36– Sierra Leone 106.02
–
Liberia
206.01–
Niger
59.28–
Mali
88.23– Burkina Faso 85.09
–
Togo
79.88CONCLUSION
- Gentlemen, the timing of these two necessary adjustments, in
the petroleum and power sectors, has raised some concerns among
Nigerians. This is a mere coincidence.First, the deregulation of PMS prices was announced on 18 March
2020, and the price modulation that took place at the beginning of
this month was just part of the on-going monthly adjustments to
global crude oil prices.
- Also, the review of service-based electricity tariffs was
scheduled to start at the beginning of July 2020 but was put on
hold so that further studies and proper arrangements can be
made.Like Mr President said today, at the opening of the Ministerial
Retreat, this government is not insensitive to the current economic
difficulties our people are going through and the very tough
economic situation we face as a nation. We certainly will not
inflict hardship on our people.But we are convinced that if we stay focused on our plans,
brighter and more prosperous days will come soon.
- The opportunistic opposition and their allies are playing dirty
politics with the issue of petrol pricing and electricity
tariff.Please note that these naysayers did not complain when the price
adjustment led to lower petrol prices on at least two occasions
since March.Nigerians must therefore renounce those who have latched onto
the issue of petrol pricing and electricity tariff review to throw
the country into chaos.19. I thank you all for your kind attention