ABUJA — Timipre Sylva, Minister of State for Petroleum Resources has said the deregulation of the downstream sector is in Nigeria’s best interests.
The minister who spoke on Sunday, at a forum hosted by the News Agency of Nigeria (NAN) in Abuja called for the deregulation of petroleum through market-driven pricing of products to boost the country’s economy.
He noted that the removal of fuel subsidy is a rational move that will be beneficial to the country’s economy.
“I will say that my stand on fuel subsidy and deregulation is well known. I strongly believe that for this country to move forward, for our economy to make the progress it desires, we need to have market-driven pricing of products.
“A situation where you produce something at a certain cost and you have to sell it at a lower cost to people because you are taking some of that burden off the people is not the best.
“It is a very desirable thing but it is also not too sustainable because what happens is that you produce it for N10, you sell it for N5; tomorrow, you produce it again at N10, you add N5 from somewhere, produce it again at N10 and sell it for another N5.
“So, the losses increase and compound daily and those accumulated losses have brought us to where we are,” he said.
Subsidy responsible for unsustainable refineries
Sylva also attributed fuel subsidy to the lack of functioning refineries within the country noting that it is responsible for some of the challenges faced in the sector.
He stated that the refineries will remain unsustainable with fuel subsidy in place.
“Part of the reasons why the refineries were not working is subsidy because a refinery that is producing something at a certain cost and selling at a loss, how can it sustain itself.
“Over the years, the refineries couldn’t sustain themselves and all of them died. So, if you do not deregulate, you will find out that even the refineries, if you fix them today, cannot be commercially operated because the refineries need maintenance and they need to run.
“If you are producing something and they are selling at a certain subsidized price, it cannot work that is why you see that the sector is not growing at all.
“You must have heard of all the subsidy scams a few years ago, people were making billions on these same subsidies.
“And when you say you want to take it out, the common man is the one on the street but at the end of the day is it the common man that is benefiting? I don’t think they are the biggest beneficiaries,’’ he said.
Fuel subsidy not beneficial to the masses
According to the minister, the benefits of oil subsidies are mostly enjoyed by a smaller group of people at the expense of the populace.
He noted that the fuels connected to the common man have been deregulated.
“Kerosene, which the common man uses to cook in a stove and used in the village to burn the firewood is deregulated. The diesel that is used to move the trucks that move food from farm to market is deregulated, but petrol which is the preferred fuel for big people is the fuel that has defied deregulation.
“But at the end of the day, I believe that it is better for us because if we can deregulate, then we can save money.
“First, you can imagine the savings we will make as far as Foreign Exchange (FOREX) is concerned and of cause, it will bring down the pressure on FOREX.
“People will be able to access FOREX for imports, government will not be the one providing foreign exchange for the importation,” he said.
According to him, since the government will no longer be subsidizing, all that money that will be gained, which is over a trillion naira yearly, instead of being burnt in cars, will now be used for development.
“You can imagine how much money the federal and state governments will have at their disposal if there is deregulation,’’ the minister said.
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