Nigeria abandons unsustainable petrol subsidy to tame rising government expenditure

Nigeria abandons unsustainable petrol subsidy

NIGERIA – The Federal Government of Nigeria through its Minister of State for Petroleum Resources, Timipre Sylva has made known its decision to completely move away from the petrol subsidy scheme in a bid to tame rising government expenditure.

Sylva revealed Nigeria’s decision in a statement published on the ministry’s Instagram page, with the title ‘Deregulation: The facts and the reasons behind the policy’.

In his statement, Sylva noted that “it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians”.

The Minister for Petroleum explained that deregulation means that the government will no longer continue to be the main supplier of petroleum products but will encourage the private sector to take over the role.

Sylva further noted that as a result of the deregulation, 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.

In his statement, the minister explained to Nigerians that henceforth, the price of crude oil will now play a role in influencing the final price of the refined product at the pump.

Sylva further noted that the burden of fuel subsidy was one of the reasons the country had been unable to attract the level of investments desired into the refining sector.

 “We need to free up that investment space so that what happened in the banking sector, aviation sector and other sectors can happen in the midstream and downstream oil sector,” Sylva said.

He said in addition to attracting investments and creating jobs and opportunities, the policy direction would “free up trillions of naira to develop infrastructure instead of enriching a few”.

Finally, Sylva noted the government is very mindful of the likely impact higher PMS prices would have on Nigerians.

To alleviate this, he explained that the government was working very hard to roll out the auto-gas scheme, which will provide Nigerians with alternative sources of fuel and at a lower cost.

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