The Federal Government on Thursday projected that about N1trn would be saved yearly from the deregulation of petroleum products’ pricing regime and that such savings would be deployed to fund critical components of the economy.
The Minister of State, Petroleum Resources, Chief Timipre Sylva, who gave the forecast in Abuja during an interview with some journalists, said he believed the decision by the federal government to reduce fuel subsidy had been a vexed issue that the country had faced over the years as successive administration failed to tackle it headlong.
He said; “I believe that this discussion around subsidy successive administrations have attempted to deregulate. But sometimes, some administrations lacked the political will and at other times, the time was not good for it. And why did I say the time was not good for it? Does that imply the time is good for it now?
“The problem around deregulation is that people must understand first, that the product we are talking about is a derivative of crude oil. It is refined from crude oil. Therefore, it has a direct relationship with the price of crude oil. If the price of crude oil goes up, then you expect that it would reflect in the price of the derivative.
“So, the best time to achieve this we looked at was the time when crude oil prices are low so that Nigerians will get the benefit of those low prices. In March, when we announced the deregulation, the prices were low and that advantage was transferred to the consumer.
“So, we brought down the price of petrol. The unfortunate thing is that when we brought down the price of petrol, nobody reacted in the market place. The prices were the same. Nobody reduced their prices because the price of petrol had reduced.
“Even bus fares, taxi fares were the same. It did not go down when we reduced the pump price of petrol. We thought that those people in the market; transport drivers and transport owners would reduce their price. But nobody reduced their prices. But anytime there is even a kobo increase in the pump price of the product, you see that people will increase their prices triple fold and fourfold”, the minister added.
According to him, even in the current situation Nigerians should not be fooled as there are people who are ready to take advantage of every situation to create anarchy and chaos, adding that it is these people that are at work now.
The minister further clarified: “Is anybody saying that this policy direction is a wrong policy direction? That is the discussion we should be having. If it is a wrong policy direction, why has every successive government attempted to do the same thing? Because it is something that is unsustainable. The subsidy is unsustainable. Let us look at it: Subsidy means that you buy the product at a certain price and then you reduce the price and sell it at a loss to the people.
“It is something that is good to do. It is something that our president would like to do so much because of his love for the common man. But is it something that can be sustained in perpetuity? You get the product and sell it less at the pump. And that is not the only subsidy.
“You also subsidise the effects that are used to import the product. So in the end, the subsidy is going in two ways. It is like burning your candle from both ends. How long can that candle last? So in the wisdom of the President and all of us, we felt that it was time because this subsidy is something that cannot be sustained in perpetuity. It is time for Nigerians to face reality and do the right thing.
“What is deregulation going to do? It is going to free up a lot more money. At least from the very beginning, it will save us up to a trillion and more every year. Already, we have taken up the budgetary provision for the subsidy which is about N500 billion in the budget.
“Also, we have taken off the excess forex price, that special rate, that was given to NNPC which also came at a cost. So, all the money that we used to defend the Naira at that time to subsidise the dollar will now be freed up for development.
“I believe that going forward, we will begin to see a lot more developments, a lot more money available to the government that will be put into critical infrastructure instead of being burnt in our cars”, Sylva predicted
On why the subsidy regime should be discontinued, the minister said: “Let us look at subsidy critically. Who are the beneficiaries of subsidy? When a few years ago you had this subsidy scam all over the place, all the monies that were taken by all the subsidy thieves and so on, how many poor people were among those people? Subsidy only provides an opportunity for rich and unscrupulous Nigerians to steal and enrich themselves at our expense, at your expense.
“So, ladies and gentlemen, deregulation is actually a policy direction that is good for the common Nigerian”, he added.