President Muhammadu Buhari says the Federal Government cannot afford fuel subsidy due to falling revenues.
Recall that the Federal Government had in March deregulated the price of premium motor spirit (PMS) in March. The move has prompted PMS prices to change with changes in global oil prices. Petrol pump prices have increased for three straight months, rising from N121.50 – N123. 50 per litre in June to N140.80 – N143.80 in July, N148- N150 in August and N58- N162 in September. Several Nigerians expressed outrage at the recent increase.
Speaking at the First Year Ministerial Performance Review Retreat, in Abuja, on Monday, Buhari blamed the ravaging COVID-19 pandemic for being responsible for “a severe downturn in the funds available to finance our budget.”
The president emphasised that fixing or subsidising PMS prices would mean going back to the “costly” subsidy regime which is not affordable as the country now has 60% less revenues.
He noted that another danger of fixing PMS prices is the potential return of fuel queues.
According to Buhari, the revised 2020 budget didn’t have any provision for fuel subsidy because the government “simply has no choice.” He noted that the status quo must be maintained if reasonable provisions must be made for health, education and other social services.
He promised that his government would ensure that marketers do not exploit citizens by raising pump prices arbitrarily.
“There are several negative consequences if Government should even attempt to go back to the business of fixing or subsidizing PMS prices,” the president said.
“First of all, it would mean a return to the costly subsidy regime. Today we have 60% less revenues, we just cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration. Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices.
“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now simply have no choice.
“Nevertheless, I want to assure our compatriots that Government is extremely mindful of the pains that higher prices mean at this time, and we do not take the sacrifices that all Nigerians have to make for granted.
“We will continue to seek ways and means of cushioning pains especially for the most vulnerable in our midst. We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily. This is the role that government must now play through the PPRA.
“This explains why the PPRA made the announcement a few days ago setting the range of price that must not be exceeded by marketers. The advantage we now have is that anyone can bring in petroleum products and compete with marketers, that way the price of petrol will be keep coming down.”