Fuel Price, Electricity Tariff hikes: Buhari says “We simply have no choice”
By Samuel Bankole
Nigeria has ruled out the possibility of reverting the subsidy on both the pump prices of petrol and electricity tariffs in the country, saying it “now simply have no choice” but to sustain the current regime of deregulations.
The government agencies regulating the downstream petroleum sector last week announced an increase in the pump prices of petrol while a new electricity tariff was also introduced, which hike cost of power consumption by as much as 70 percent.
However, President Mohammadu Buhari in a message to the First Yearly Ministerial Performance Review Retreat in Abuja said that reversing the reforms in the petroleum downstream sector “would mean a return to the costly subsidy regime.”
The president who was represented at the event by his deputy, Yemi Osinbajo noted that a reversal could resulted in the return of fuel queues, “which has, thankfully, become a thing of the past under this administration.”
The president also said there was no provision for fuel subsidy in the revised 2020 budget, simply because Nigeria is not able to afford it in the face of the dwindling resources as a result of the impact of the coronavirus pandemic on the global economy.
“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 percent 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. 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,” the president said.
He said the government will also remain alert to its 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 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,” Buhari said.
on the recent hike in the tariff on electricity consumption, the president said the recent service based tariff adjustment by the Discos has also been a source of concern for many of us.
“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 borrrow 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. 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.#GFD