The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, on Monday, said the country will need to revert to the old pump price of N97 per litre of Premium Motor Spirit, popularly known as petrol, next year, as the nation’s economy cannot adequately support the current price of N87 per litre.
The minister stated this while defending his ministry’s projections as contained in the 2016 to 2018 Medium Term Expenditure Framework and Fiscal Strategy Paper before the Joint Senate/House of Representatives Committee on Finance, Appropriation and Banking, Insurance and other Financial Institutions.
Recall that on January 18 this year, the former Minister of Petroleum Resources, Mrs. Deizani Alison-Madueke, announced that the Federal Government had approved the reduction of the pump price of petrol by N10 due to the fall in the global price of crude oil, stating that PMS was to sell for N87 per litre.
She therefore directed all filling stations and the regulatory authorities to effect the change of price immediately.
However, the new minister explained that the Federal Government was considering a reversal to N97 per litre in order to ensure that it would no longer fund the subsidy scheme.
He said the issue of total subsidy removal would come after the nation had been able to convince itself that the reversal to N97 would still be costing the government extra funds.
Kachikwu said, “The total subsidy figure for 2015, when taken along with the NNPC’s subsidy payment, will be in excess of N1tn. The current pricing work we are doing has shown that there shouldn’t really be subsidy. The government doesn’t need to fund subsidy.
“There is energy around the removal of subsidy. Most Nigerians we talk to today will say that’s where to go. I have since left the dictionary of subsidy by going to price modulation, which is a bit more technical.
“The price of refined petrol today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to fund it. There are lots of safety barometers between the N87 and N97per litre regime. The government does not have to fund subsidy and yet the prices would have been fairly close to what it is today.
“That is the first mechanism we are going to work. It is when that mechanism fails that we will begin to look at a total subsidy exit. We believe we can achieve that.”
Kachikwu appeared alongside the Minister of Finance, Mrs. Kemi Adeosun; Minister of National Planning, Senator Udo Udoma; Central Bank of Nigeria Governor, Godwin Emefiele; Chairman, Federal Inland Revenue Service, Mr. Babatunde Fowler; and Director-General, Debt Management Office, Dr. Abraham Nwankwo, among others.