The federal government of Nigeria has removed subsidy
on fuel and it will now start to sell for N145 per litre.
This removal was made on Wednesday, May 11.
Until the removal, the official price of petrol was N87
per litre although consumers have been paying as much
as N200 for fuel due to scarcity.
Ibe Kachikwu and President Muhammadu Buhari
The removal in fuel subsidy has been a lingering issue
since President Muhammadu Buhari took over power.
The minister of state for petroleum product, Dr
Emmanuel Ibe Kachikwu had said that the citizens were
not benefitting from the subsidy which made it
necessary to be removed.
An official in the petroleum industry had earlier said the
federal government would deregulate the downstream
sector of the Nigerian petroleum industry so as to put
an end to scarcity.
The petroleum minister in a statement said the decision
was taken based on the current challenges and that
Nigerians have been paying exorbitant prices for fuel.
We have just finished a meeting of various stakeholders
presided over by His Excellency, the Vice President of the
Federal Republic of Nigeria.
The meeting had in attendance the Leadership of the
Senate, House of Representatives, Governors Forum, and
Labour Unions (NLC, TUC, NUPENG, and PENGASSAN).
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The meeting reviewed:
“The current fuel scarcity and supply difficulties in the
country.
“The exorbitant prices being paid by Nigerians for the
product. These prices range on the average from N150 to
N250 per litre currently.
“The meeting also noted that the main reason for the
current problem is the inability of importers of petroleum
products to source foreign exchange at the official rate due
to the massive decline of foreign exchange earnings of the
federal government. As a result, private marketers have
been unable to meet their approximate 50% portion of total
national supply of PMS.
Following a detailed presentation by the Honorable Minister
of State for Petroleum Resources, it has now become
obvious that the only option and course of action now open
to the government is to take the following decisions:
“In order to increase and stabilise the supply of the product,
any Nigerian entity is now free to import the product,
subject to existing quality specifications and other
guidelines issued by Regulatory Agencies.
” All Oil Marketers will be allowed to import PMS on the
basis of FOREX procured from secondary sources and
accordingly PPPRA template will reflect this in the pricing
of the product.
“Pursuant to this, PPPRA has informed me that it will be
announcing a new price band effective today, 11th May,
2016 and that the new price for PMS will not be above
N145 per litre.
“We expect that this new policy will lead to improved supply
and competition and eventually drive down pump prices, as
we have experienced with diesel. In addition, this will also
lead to increased product availability and encourage
investments in refineries and other parts of the downstream
sector. It will also prevent diversion of petroleum products
and set a stable environment for the downstream sector in
Nigeria.
“We share the pains of Nigerians but, as we have
constantly said, the inherited difficulties of the past and the
challenges of the current times imply that we must take
difficult decisions on these sorts of critical national issues.
Along with this decision, the federal government has in the
2016 budget made an unprecedented social protection
provision to cushion the current challenges.
“We believe in the long term, that improved supply and
competition will drive down prices.
“The DPR and PPPRA have been mandated to ensure strict
regulatory compliance including dealing decisively with
anyone involved in hoarding petroleum products.”
The vice president, Professor Yemi Osinbajo hinted
earlier on Wednesday that Nigeria had reached a point
where tough decisions had to be taken.
He said: “No matter how we slice it, we are in economic
times that are challenging, but they provide us with
some of the best opportunities for making a real
difference in our economic life.
“I think that we are at a point that a lot has been said about
subsidies and what to do with subsidies. I think we are at a
point where we must make many difficult decisions and
make very tough choices.
“But I think the Nigerian people are prepared for all what is
required and all it would take to make a real difference. “In
no way can a country make the kind of progress we expect
it to make without being able to ensure that in public life
our finance system is transparent and would ensure that
there is accountability.”
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