By Adelola Amihere
The Federal government on Monday explained that subsidizing fuel is no longer feasible, especially under the prevailing economic conditions in the country
Minister of Information and Culture, Alhaji Lai Mohammed, told journalists at a media briefing in Abuja that the nation’s revenues and foreign exchange earnings have fallen by almost 60 per cent due to the downturn in the fortunes of the oil sector.
Alhaji Mohammed, who addressed journalists on the recent increases in petrol and electricity prices alongside the Minister of Power, Saleh Mamman and Minister of State Petroleum, Timipreye Sylvia, said that despite the economic situation, the government sustained expenditures, especially on salaries and capital projects and stopped unsustainable practices that were weighing the economy down.
He said, “Recall that the price of fuel then dropped from 145 to 125 Naira per litre, and then to between 121.50 and 123.50 Naira per litre in May. With the low price of crude oil then, the cost of petrol, which is a derivative of crude oil, fell, and the lower pump price was passed on to the consumers to enjoy. With the price of crude inching up, the price of petrol locally is also bound to increase, hence the latest price of 162 Naira per litre. If, perchance, the price of crude drops again, the price of petrol will also drop, and the benefits will also be passed on to the consumers
“The angry reactions that have greeted the latest prices of Premium Motor Spirit (PMS) are therefore unnecessary and totally mischievous.
“Gentlemen, the cost of fuel subsidy is too high and unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413 Trillion Naira. That is an average of 743.8 billion Naira per annum.”
The. Minister continued, “Another issue we want to address here today is the recent service-based electricity tariff adjustment by the Distribution Companies, or DISCOS. The truth of the matter is that due to the problems with the largely-privatized electricity industry, the government has been supporting the industry. To keep the industry going, the government has so far spent almost 1.7 trillion Naira, especially by way of supplementing tariffs shortfalls. The government does not have the resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatized, will be grossly irresponsible.”
