Petrol Price: FG Rules Out Total Deregulation

Vice President Yemi OsinbajoVice President Yemi Osinbajo
  • Petrol Price: FG Rules Out Total Deregulation

The Federal Government on Thursday announced that it had ruled out the total deregulation of the downstream oil and gas sector so as not to raise the pump price of Premium Motor Spirit, popularly known as petrol.

It noted that any attempt to enforce a total deregulation of the sector would lead to an increase in the prices of petroleum products, adding that it was aware of the severe consequence that this would have on Nigerians.

Speaking at the 2017 African Modular Refinery Discussion organised in Abuja by the Modular Refineries Association of Nigeria, Acting President Yemi Osinbajo, noted that despite calls for the complete deregulation of the downstream oil sector, the government would not do so but would continue to moderate activities in the industry.

He said, “There are those who are saying we need to deregulate fully. Why are they saying that? It is because if we do not deregulate, it is not cost-effective for those who are producing PMS to sell. At the same time, if you deregulate completely, prices of everything will go up.

“So there are those complications, meaning we got to moderate all those things. Government has to come in to a certain extent and this is what is currently going on to try and balance things up. Because we cannot have just overnight another massive deregulation. If you do that, the consequences will be very dire for the economy.”

Osinbajo also blamed the government’s involvement in the refineries for the failure and near collapse of the facilities in Kaduna, Warri and Port Harcourt.

According to him, in the new modular refineries’ initiative, oil producing communities will be made to acquire stakes in refineries that are set up in their localities, while the federal and state governments will have some stake, as well as private investors.

He said the government was committed to creating an enabling environment for private sector participation and investments in modular refineries, adding that it was aware of the challenges and complications posed by the non-deregulation of the sector.

Speaking further on the poor performance Nigeria’s three refineries, Osinbajo said the Federal Government had also ruled out building and managing refineries, adding that it would only create the atmosphere for private players.

He stated, “Government cannot just go and be setting up refineries. If government sets up refineries and uses its people to run it, it won’t work. We have good examples in all the refineries that we have seen. If you look at the refineries we have today, Warri, Port Harcourt and Kaduna, the primary reason they are not working today is that they are government-run.

“Government cannot do business. Government business is to create the enabling environment for business. And then, government will put some investment into it. Government should not be in the business of setting up refineries all over the place. That is just a waste of time and resources.”

The acting President added that the nation must exploit the massive petroleum resources that it had and explained that this prompted the Federal Government’s decision to establish modular refineries across the Niger Delta in particular.

He stated that in ensuring increased community participation, citizens from the Niger Delta must ensure that they participated adequately in the process.

Osinbajo added, “They are entitled not because they live in the Niger Delta, but they are entitled to it because they also have the brains, the resources to be able to make it happen and this is what I have seen from my engagement with people in the Niger Delta.

“They themselves are bringing in the investors; they themselves are talking to private investors locally and internationally, and they are bringing them here.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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