Nigeria cannot guarantee a low price for petrol because of the impact of market forces and the need to end subsidy for the local consumption of the product, the government said Thursday.
Timipre Sylva, the country’s junior minister for petroleum resources, said this in a statement published on the Instagram page of the ministry.
President Muhammadu Buhari holds the portfolio of the Minister of Petroleum Resources.
Sylva explained that the government had concluded to discontinue the practice of carrying the burden of petrol subsidy.
The practice of subsidizing petroleum products in Africa’s leading oil producer has often ended up as a scam, as many companies that obtained funds to import the subsidized products ended up not delivering them.
“After a thorough examination of the economics of subsidizing PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidizing PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians,” Sylva said in the statement titled ‘Deregulation: The facts and the reasons behind the policy’.
According to him, the meaning of deregulation is that the government would no longer continue to be the major supplier of petroleum products. Instead, it would encourage the private sector to take over the responsibility of being the supplier of the products.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers,” Sylva said.