Amid criticisms trailing the new price regime for Premium Motor Spirit (PMS), the federal government insisted yesterday it will not reverse its decision on the issue.
According to it, while there is no provision for subsidy in the 2016 budget, the present economic reality in the country has made the payment of subsidy on PMS impossible.
This is coming just as the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) has given the federal government till Tuesday night to revert the pump price of Premium Motor Spirit (PMS) also know as fuel to its old rate of N86:50 or face a nationwide strike that will ground the economy.
But the Minister of Information and Culture, Alhaji Lai Mohammed who made government position known at the inauguration of the Advertising Association of Nigeria (ADVAN) Marketers Conference in Lagos affirmed that government took the painful decision because of the activities of militants and economic downturn in the country.
The federal government, after meeting with organised labour and others, had on Wednesday announced the increase of the price of fuel from N87,00 to N145,00 per liter, an action which generated mixed reactions and massive protest from Nigerians, especially workers as cost of commodity shoot up.
Maintaining that government is adamant on the new fuel price, Mohammed said, “As you are very much aware, a new price regime for Premium Motor Spirit, otherwise known as petrol, was recently announced by the federal government. Many have been asking why this would happen at this time and what triggered the decision concerning the new framework for petrol products supply, distribution and pricing.
“I can tell you that that decision is inevitable, if we are to end the crippling fuel scarcity that has enveloped the country, ensure the availability of the products and end the suffering that our people have been subjected to. With the drastic fall in the price of crude oil, which is the nation’s main foreign exchange earner, there has also been a drastic reduction in the amount of foreign exchange available.
“The unavailability of forex and the inability to open letter of credit have forced marketers to stop product importation and imposed over 90% supply on the NNPC since October 2015, in contrast to the past where NNPC supplies 48% of the national requirement.
“The truth is that the NNPC does not have the resources for, nor is it designed to meet this increase in supply. The result is the crippling fuel situation across the country. Pushed to supply 90 percent of the products required for domestic consumption, the NNPC has continued to utilize crude oil volumes outside the 445,000 barrels/day allocated to it, thereby creating major funding and remittance gaps into the Federation account.”
The minister explained that since the announcement of the new price regime, many have interpreted it as the removal of subsidy, saying, “the truth, ladies and gentlemen, is that there is no provision for subsidy in the 2016 Appropriation.
“The erstwhile PMS price of N86.50 gives an estimate subsidy claim of N13.7 per litre which translates to N16.4 billion monthly. There is neither funding nor appropriation to cover this”, he added.
Mohammed further explained that “the renewed insurgency and pipeline vandalism in the Niger Delta have drastically reduced national crude oil production to 1.65 million barrels per day, against 2.2 million barrels per day planned in the 2016 budget, further reduce income to Federation account.”
The minister, who solicited the understanding and cooperation of the citizens and the various organizations like ADVAN, added that the problem had also affected crude volumes for PMS conversion and impacting Federal Government’s forex earnings.
His words: “Let me also note that the resultant fuel scarcity has created an abnormal increase in price, resulting in Nigerians paying between N150 and N300 per litre as prevalent hoarding, smuggling and diversion of products have red