Fuel Price Increase Reflects Govt’s Plan To Exit Subsidy—Expert

The decision of the Federal Government to increase the pump price of Premium Motor Spirit is a reflection of its plan to exit the fuel subsidy regime.

The President, Association of Capital Market Academics of Nigeria, Prof Uche Uwaleke said this on Thursday while reacting to the increase in fuel price by the Federal Government.

The Petroleum Products Pricing Regulatory Agency had on Wednesday announced a PMS pump price band of N140.80 to N143.80 for the month of July from N123.50 in June.

Uwaleke said the plummeting government revenue and the pressure on government finances occasioned by Covid-19 had made it difficult for the Federal Government to continue to subsidize petroleum products

He urged the government to fully deregulate the downstream sector, noting that this would pave way for private investments.

Uwaleke, who is Nigeria’s first Professor of Capital Market Studies also said deregulation of the downstream sector would help to provide a competitive environment that would ultimately drive down the prices of petroleum products prices.

The university don said while the OPEC+ production-cut agreement is yielding positive result by helping oil price recovery, which Nigeria is currently benefitting from, this translates to higher cost of petroleum products imports.

He said, “Until we develop the capability to refine enough crude oil for domestic consumption, the pump price of PMS will continue to be exogenously determined.

“This is the sad reality. Now that the government has lifted the ban on inter-state travel as part of measures to restart the economy, we cannot afford any round of fuel scarcity and the attendant costs to the economy.

“In due course, especially post COVID’19, I expect the government to fully deregulate the downstream sector, paving way for private investments and generating a competitive environment that will drive down petroleum products prices ultimately.

“Only then, will the hand of the PPPRA become less visible.”