The Minister of State for Petroleum, Mr. Timipre Sylva, yesterday described the removal of petrol subsidy as an appropriate action because it favours only the elite at the expense of the poor.
Briefing journalists after meeting with President Muhammadu Buhari in the State House, Abuja, Sylva said if prices of diesel and kerosene, which are petroleum products used by the poorest people of the society had long been deregulated, it would be unfair not to deregulate the price of petrol consumed mainly by the rich.
According to him, end-users of diesel, for instance, are peasant farmers whom he said regularly transport their farm produce through trucks, powered by diesel, adding that users of kerosene are also the masses who cannot afford to buy cars.
He wondered why deregulating the petroleum downstream sector would generate issues when products mainly consumed by poorer people have long been deregulated.
He said: “Look at it, a situation where diesel has been deregulated long ago, a situation where kerosene has been deregulated long ago, and these are the fuels that the poorest and lowest people in Nigeria interacted with more.
“Why do I say that? If you want to transport food from the North to the South, it will be by trucks that are run by diesel, not with petrol. Those trucks that transport food from the North to the South are usually run by diesel.
Kerosene is the preferred fuel at the lowest level of our society. These have been deregulated long ago. So, what is the problem with deregulating petrol, which is mostly used by the elite?
“Let us be fair to this country. Let us be fair to the poor people of the country. If we have deregulated what they were using, then there is absolutely no reason to subsidise petrol. I feel so. The only explanation for everything we have said is the country just could not afford subsidy anymore.”
Sylva explained that if the subsidy regime continues in the face of the drastic fall in the prices of crude oil in the global market and oil production cut by the Organisation of Petroleum Exporting Countries (OPEC), the federal government would get to the level where it would be unable to pay salaries after paying subsidy.
He added that the latest hike in the pump price of petrol from N157-N160 to N167-N170 was the fallout of the rise in crude oil price in the international market following the 90 per cent successful trial of COVID-19 vaccine announced by Pfizer.
He said following the deregulation of fuel supply, the pump price of petrol would continue to rise whenever the prices of crude oil increase in the international market and go down when the crude oil prices crash.
Sylva said: “Before now, we fixed it, which was not optimal for us as a country. So, we said, ‘look, our earnings are not fixed because our earnings are dependent on the crude oil price.’ If we fix it at this end, then it becomes unsustainable at some point. So, let us keep it floating so that if crude oil prices go up, then you’ll see a reflection of that. If crude oil prices go lower, you’ll see a reflection of that at the pump.
“Now, what happened recently was because of the announcement of a vaccine for COVID-19 by Pfizer. With that, crude oil prices went up a little bit. Of course, you have been following crude oil prices. You would have seen that crude oil prices went up a little bit, as a result of this announcement.”
He said the federal government had to choose between removing petroleum subsidy and running into other crises as a result of lower oil production and crash of crude oil price.
The minister, who reiterated that the government earnings had reduced by 60 per cent as a result of the trend in the oil sector, added that the situation has dire effects on revenue generation by the Federal Inland Revenue Service (FIRS).
According to him, “If the government were to continue with the subsidy, it means for example that at some point, we may not even have money after subsidising petrol to pay salaries.
“You have to make a choice. It is very clear that today, things are not as they were before. The earnings of government have reduced by 60 per cent and what is happening in the oil sector reflects what is happening elsewhere.
“Our FIRS collection has also reduced because less oil is being produced. There is less activity in the oil industry, which is driving the economy. So, you find out it is a double whammy from all sides.
“I am telling you, if Mr. President could have continued with the subsidy, he would have. But when you look at the facts before us, it is not possible and of course, we are seeing some of the effects but I believe that at this point, we are still trying to cross the first buck. We will get there. We will get used to it as Nigerians.”