… It says that N1trn was saved from the elimination of the subsidy
… To merge PPPRA, PEF
… Consider cheaper gas products as palliative
By Michael Eboh
The Minister of State for Oil Resources, Chief Timipre Sylva, revealed yesterday that the Federal Government is currently not in a position, financially, to pay the subsidy, since the COVID-19 pandemic had negatively impacted the country’s finances.
Addressing journalists in Abuja, Sylva also revealed that since the introduction of the deregulation policy in March 2020, the country had saved around $ 1 trillion.
He also said that the Federal Government had concluded plans to merge the Petroleum Products Price Regulatory Agency, PPPRA, and the Petroleum Compensation Fund, PEF, into an agency called “The Authority.”
Sylva pointed out that the deregulation of the oil sector and the elimination of subsidies was not a political decision, but had become inevitable, especially with the effect of the COVID-19 pandemic, low crude oil prices and the reduction of Nigerian production by OPEC. , which had limited government revenue.
He said: “It became necessary for the country to not be able to sustain subsidy payments, hence the decision to deregulate. The government has stopped subsidizing gasoline at the pump, but will now play its traditional role of protecting consumers from exploitation, ensuring that merchants do not profit at the expense of ordinary Nigerians and consumers of the product.
“We are no longer in the business of setting prices; we have stepped back and allowed market forces to determine prices. From now on, if the price of crude rises or falls, it would be reflected in the pumps.
“It’s about the survival of the country and there are certain things the country can afford right now. We have cut production to 1,412 million barrels, which has halved our profits. “
He added that the revenue that is currently available to the government has been significantly reduced and has raised the question of where the government would get the money to pay the subsidy.
“It is a necessary policy; We would get over this initial pain, eventually we would get over it, ”Sylva said.
He further explained that the savings of around N1 trillion since the elimination of the subsidy come from the expulsion of N500 billion destined for the payment of subsidies in the 2020 budget and the elimination of currency differentials, which saved the country around N500 billion too.
To cushion the effect of the phase-out on Nigerians, Sylva said the Federal Government was accelerating the nationwide rollout of a cleaner and cheaper alternative to Premium Motor Spirit, PMS, also known as gasoline, such as liquefied petroleum gas, LPG and compressed natural gas, CNG.
He said: “We believe that the solution to this must be sustainable, hence the palliative that the government is considering, is that we are introducing a cheaper and better fuel. In the end, I don’t think people will feel the increase that much, as gas would be half cheaper than PMS.
“The Central Bank of Nigeria, CBN, had introduced new funds for Nigerians at cheaper rates.”
In addition, he claimed that the government was monitoring prices, using its templates, to ensure that the prices that traders would produce are fair, while he promised that any trader who finds himself charging prices beyond the range that he knows is fair will be penalized. .
PPPRA, PEF will merge
Sylva also added that PPPRA and PEF would remain relevant to act as an industry regulator, noting that without PPPRA and PEF speculators would be difficult to deal with.
However, he revealed that the PPPRA and the PEF would not exist as they currently are, and stated that with the approval of the Oil Industry Bill, PIB, the two organizations would be merged into one and called ‘The Authority’, to help to monitor the downstream process. sector.