Federal government affirms deregulation, says no resort to fuel subsidy

The Federal Government yesterday, affirmed its resolve to deregulate the downstream sector, stating that the country would no longer resort to subsidy or under-recovery if oil prices regain momentum.

If the government follows through the plan, Nigerians would begin to pay cost-reflective rates for petrol, using PPPRA’s monthly guide to NNPC and marketers on the appropriate pricing regime.

The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, in a television programme monitored by The Guardian, yesterday, said the Corporation would just be another player in the downstream sector.

He said: “As at today, subsidy/under-recovery is zero. Going forward, there will be no resort to either subsidy or under-recovery of any nature. NNPC will just be another player in the market space. But we will be there for the country to sustain security of supply, at the cost of the market”.

President Muhammadu Buhari had last month, approved the reduction in the price of PMS, as a direct effect of the crash in global crude oil prices.

The Guardian had reported that the new monthly pricing template which had in the last four years not being implemented, may set the Federal Government on a collision course with marketers who continue to advocate full deregulation of the sector.

The country had enjoyed stability and some level of un-interrupted supply of petroleum products within the last four years, due to a pricing mechanism that was retained despite changes in global oil prices and government’s monopoly in the importation of petrol.

Kyari said: “Today, we have a very robust products supply & distribution from the loading depots up to fuel stations nationwide. We also have very good understanding with our strategic partners: the governors, marketers, depot owners, PTD, etc. There are no issues whatsoever.

“The key issue in crude oil business is market fundamentals of demand/supply. I believe COVID-19 will subside and countries will come back to life. I don’t see oil price going below the $20 we saw last week. I’m certain, all things being equal, oil price will bounce back”.

Meanwhile, ahead of the OPEC+ meeting scheduled for Thursday this week, Minister of State for Petroleum Resources, Timipre Sylva yesterday, said the Federal Government would take a balance position that is favourable for the country and the global market.

Sylva assured that the country is watching developments in the oil and gas industry with keen interest, adding that Nigeria is very mindful and appreciative of the role of Saudi Arabia and other members of the OPEC family.

Promising to keep an eye on the impact of Covid-19 on, and the global economy, the Minister said: “In our consultations with global industry stakeholders in the lead up to the meeting, Nigerian Government will take a position that is in the best interest of our short term and long term economic forecast.

“It is well known that Nigeria has always collaborated with key OPEC members such Saudi Arabia in maintaining a balanced position that has helped to make OPEC one of the most successful global institutions in recent history. Nigeria intends to maintain this team spirit even as it takes into account the position of OPEC strategic allies such as Russia.

“As always the driving force of our OPEC policy is first the stability of our national economy as well as the stability of the global economy which is heavily dependent on OPEC and it’s strategic partners, popularly referred to as OPEC+.

“Nigeria, like the rest of the world has been hit by the Global Pandemic Covid-19, and is prepared to join the rest of the world in making the necessary sacrifices needed to stabilize the crude oil market; and to prevent what is likely to be a major global economic meltdown.”