7th September, 2020
By Kazeem Ugbodaga
Nigeria’s President, Muhammadu Buhari on Monday said there is no going back on fuel and electricity tariff hike in the country.
Buhari, who spoke at First year Ministerial Performance Review Retreat, at the State House Conference Centre, Abuja, said regrettably, government could not go back on its decision to deregulate the petroleum sector and allow the forces of demand and supply at the international level to dictate the prices of Premium Motor Spirit.
The president, who was represented by Vice President Yemi Osinbajo said the COVID-19 pandemic, had led to a severe downturn in the funds available to finance its budget and had severely hampered government’s capacity to deliver, saying that one of the steps taken 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,” he said.
According to Buhari, there were 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, as I hinted earlier, 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,” he said.
The president assured that government was extremely mindful of the pains that higher prices meant at this time, and that government did not take the sacrifices that all Nigerians had 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 Petroleum Price Regulatory Agency, PPRA. 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,” he added.
On electricity tariff, Buhari stated that the recent service based tariff adjustment by the Discos had also been a source of concern for many Nigeria, saying that “Let me say frankly that like many Nigerians I have been very unhappy about the quality of service given by the Discos, but there are many constraints including poor transmission capacity and distribution capacity.
“I have already signed off on the first phase of the Siemens project to address many of these issues. Because of the problems with the privatization exercise, government has had to keep supporting the largely privatized electricity industry. So far to keep the industry going we have spent almost 1.7 trillion, especially by way of supplementing tariffs shortfalls.
“We do not have the resources at this point to continue in this way and it will be grossly irresponsible to borrow to subsidize a generation and distribution which are both privatized. 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 12 hours of power and above can have their tariffs adjusted.”
The president said those who got less than 12 hours supply, or the Band D and E Customers must be maintained on lifeline tariffs, meaning that they would experience no increase, stressing that this is the largest group of customers.
He explained that government had also taken notice of the complaints about arbitrary estimated billing.
“Accordingly, a mass metering programme 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,” he said.