Minister of State for Petroleum Resources, Timipre Sylva, disclosed this on Thursday in Abuja in a briefing to mark his one year in office.
Sylva said the Federal Government has also resolved to step aside from fixing fuel prices, thus it has decided to merge the Petroleum Products Pricing Regulatory Agency (PPPRA), and the Petroleum Equalisation Fund (PEF).
The merged body would henceforth be known as ‘The Authority’.
The minister, who emphasized that decision to deregulate the downstream sector, as well as subsidy suspension was not political, said the deregulation policy had saved the nation about N1 trillion since it was introduced in March 2020.
His words: “It became necessary that the country cannot sustain subsidy payments, hence the decision to deregulate. Government has stopped subsidising petrol at the pump, but will now play its traditional role of protecting consumers from exploitation, by ensuring that marketers do not profiteer at the expense of ordinary Nigerians and consumers of the product.
“We are no longer in the business of fixing prices; we have stepped back and allowed market forces to determine the prices. Henceforth, if crude oil price goes up or down, it would reflect at the pumps.
“This is about the survival of the country and there are certain things the country can afford at this time. We have cut production to 1.412 million barrels, which had halved our earnings.”
He added that the revenue that is currently available to the government had reduced considerably, and has raised the question of where would the government get the money to pay subsidy.
“It is a necessary policy; we would get over this initial pain, with time, we would get past it,” Sylva maintained.
According to him, “the savings of about N1 trillion since the removal of subsidy comes from the expulsion of N500 billion earmarked for subsidy payment in the 2020 budget and the removal of foreign exchange differentials, which saved the country around N500 billion also.”
He stressed further that in order to reduce the harsh implications of the new policy on the masses, the FG would hasten a roll-out of cleaner and cheaper alternative to premium Motor Spirit, PMS, also known as petrol, such as liquefied Petroleum Gas, LPG, and Compressed Natural Gas, CNG.
“We think the solution to this should be sustainable, hence the palliative that the government is considering, is that we are introducing a fuel that is cheaper and better. In the end, I do not think people would feel the increase that much, as gas would be cheaper by half than PMS.
“The Central Bank of Nigeria, CBN, had introduced new funds for Nigerians at cheaper rates.” He added.
Sylva further assured the public of governments commitment against any form of extortion by the oil marketers.