President Muhammadu Buhari on Monday gave copious reasons his government cannot reverse the increase in the prices of petrol and Electricity tarrifs saying the 2020 budget has no provision for petrol subsidy.
Buhari spoke at the start of the first-year Ministerial performance review retreat ,his remarks were delivered by Vice President,Yemi Osinbajo.
According to the President, there will be negative consequences if the government continued with the business of fixing or subsidising the prices of Premium Motor Spirit (PMS) known as petrol.
He explained further that the COVID-19 pandemic had led to a severe downturn in the funds available to finance the nations’ budget and also severely hampered government’s capacity.
Buhari said that one of the steps government took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown was the deregulation of PMS.
The President however assured,that government was working towards mitigating the impact of the deregulation on the citizens.
“There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising PMS prices.
“First of all, it would mean a return to the costly subsidy regime; today we have 60 per cent 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.
The president said that government was extremely mindful of the pains that higher prices meant at this time.
He said that the government did not take the sacrifices that all Nigerians had 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 Petroleum Products Pricing Regulatory Agency (PPPRA).
“This explains why the PPPRA 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.’’
Buhari said the recent service-based tariff adjustment by the Electricity Distribution Companies (Discos) had also been a source of concern for his government.
The president said that like many Nigerians, he had been unhappy with the quality of service given by the Discos, but there were many constraints including poor transmission capacity and distribution capacity.
Buhari said he already signed off on the first phase of the Siemens project to address many of these issues.
“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry.
“ So far to keep the industry going we have spent almost N1.7 trillion, especially by way of supplementing tariffs shortfalls.
“ We do not have the resources at this point to continue in this way and it will be grossly irresponsible to borrow to subsidise a generation and distribution which are both privatized.
“But we also have a duty to ensure that the large majority of those who cannot afford to pay cost reflective tariffs are protected from increases.’’
According to the president, the Nigerian Electricity Regulatory Commission (NERC), the industry regulator, had approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.
He said that under the new arrangement, only customers who were guaranteed a minimum of 12 hours of power and above could have their tariffs adjusted.
Buhari said that those who got less than 12 hours supply, or the Band D and E Customer must be maintained on lifeline tariffs, meaning that they would experience no increase.
He assured Nigerians of the willingness and determination of the Federal Government to provide stable electricity to every home and industry, while considering the economic challenges before individuals, families and businesses, explaining that “implementation of a Willing buyer, Willing Seller Policy for the power sector has opened opportunities for increased delivery of electricity.’’