President Mohammadu Buhari has said that his administration have no choice than to allow the global oil market forces to determine local fuel prices as well as new electricity reflective tariff to stay.
Speaking today in Abuja at the First Year Ministerial Performance Review Retreat
State House Conference Centre, the President said would be grossly irresponsible to borrrow to subsidize a generation and distribution which are both privatized, stressing that because of the problems with the privatization exercise, government has had to keep supporting electricity industry.
“So far to keep the industry going we have spent almost 1.7 trillion, especially by way of supplementing tariffs shortfalls”.
“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.
NERC, the industry regulator therefore approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service. Under this new arrangement, only customers who are guaranteed a minimum of 12hours of power and above can have their tariffs adjusted. Those who get less than 12 hours supply, or the Band D and E Customers MUST be maintained on lifeline tariffs, meaning that they will experience no increase. This is the largest group of customers. Government has also taken notice of the complaints about arbitrary estimated billing. Accordingly, a mass metering program is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process”.
NERC has also committed to strictly enforcing the capping regulation which will ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood. In other words no more estimated Billings.
On fuel price hike. The President said: “The COVID-19 pandemic, has led to a severe downturn in the funds available to finance our budget and has severely hampered our capacity to ..one of the steps we took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown, was the deregulation of the price of premium motor spirit (PMS) such that the benefit of lower prices at that time was passed to consumers. This was welcome by all and sundry. The effect of deregulation though is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally will also go up”.
“There are several negative consequences if Government should even attempt to go back to the business of fixing or subsidizing PMS prices. 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, 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 PPPRA. 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”.