The Minister of State for Petroleum Resources, Timipre Sylva Thursday, said the Nigerian government never at any time made a promise to keep the pump price of gasoline permanently low.
“We can no longer avoid the inevitable and expect the impossible to continue. There was no time government promised to reduce pump price and keep it permanently low,” Mr Sylva said in a series of Tweets posted on the petroleum ministry’s Instagram page in a post titled “Deregulation: The facts and the reasons behind the policy.”
He noted that deregulation implied that government had ceased to be the sole importer of petroleum products but would back private sector’s involvement in the supply chain.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers.”
He compared the watchdog role of government to that played by the central bank in the banking industry in “ensuring that commercial banks do not charge arbitrary interest rates.”
“Petroleum products are refined from crude oil. Therefore, the price of crude (the feedstock) for the refining process will affect the price of the refined product.
“When crude oil prices were down, government, through its regulatory functions, ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered. At that time, we indicated that an increase in crude oil prices will also reflect at the pump,” he said.
According to the minister, the petroleum subsidy system constituted one of the reasons why Nigeria had not been able to attract international investors.
“We need to free up that investment space so that what happened in the banking sector, the aviation sector and other sectors can happen in the midstream and downstream oil sector,” he said.