Lai Mohammed to Nigerians: Our petrol, electricity prices one of the cheapest in Africa + Full text

By GBENGA ADEOLA

TEXT OF THE PRESS CONFERENCE ADDRESSED BY THE HON MINISTER OF

INFORMATION AND CULTURE, ALHAJI LAI MOHAMMED, IN ABUJA ON MONDAY, 7

SEPT. 2020 ON THE RECENT INCREASES IN PETROL AND ELECTRICITY PRICES

 

PROTOCOL

 

Gentlemen of the press, good afternoon, and thank you for honouring

our invitation to this press conference, which we have called to

address the recent issues surrounding the price of fuel and electricity tariff.

 

FUEL PRICES

2. As you are aware, the long-drawn fuel subsidy regime ended in March

2020, when the Petroleum Products Pricing Regulatory Agency (PPPRA)

announced that it had begun fuel price modulation, in accordance with

prevailing market dynamics, and would respond appropriately to any

further oil market development.

 

3. Recall that the price of fuel then dropped from 145 to 125 Naira

per litre, and then to between 121.50 and

123.50 Naira per litre in May. With the low price of crude oil then,

the cost of petrol, which is a derivative of crude oil, fell, and the

lower pump price was passed on to the consumers to enjoy. With the

price of crude inching up, the price of petrol locally is also bound

to increase, hence the latest price of 162 Naira per litre. If,

perchance, the price of crude drops again, the price of petrol will

also drop, and the benefits will also be passed on to the consumers.

The angry reactions that have greeted the latest prices of Premium

Motor Spirit (PMS) are therefore unnecessary and totally mischievous.

 

4.  Gentlemen, the truth of the matter is that subsidizing fuel is no

longer feasible, especially under the prevailing economic conditions

in the country. The government can no longer afford fuel subsidy, as

revenues and foreign exchange earnings have fallen by almost 60%, due

to the downturn in the fortunes of the oil sector. Yet, the government

has had to sustain expenditures, especially on salaries and capital

projects. Even though we have acted to mitigate the effect of the

economic slowdown by adopting an Economic Sustainability Plan, we have

also had to take some difficult decisions to stop unsustainable

practices that were weighing the economy down.

 

5.  One of such difficult decisions, which we took at the beginning

of the Covid-19 pandemic in March – when oil prices collapsed at the

height of the global lockdown – was the deregulation of the prices of

PMS. As I said earlier, the benefit of lower prices at that time was

passed to consumers. Everyone welcomed the lower fuel price then.

Again, the effect of deregulation is that PMS prices will change with

changes in global oil prices. This means quite regrettably that as oil

prices recover, there will be some increases in PMS prices.  This is

what has happened now.

 

6.  Government can no longer afford to subsidize petrol prices,

because of its many negative consequences. These include a return to

the costly subsidy regime. With 60% less revenues today, we 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. The days in which Nigerians queue for hours and days

just to buy petrol, often at very high prices, are gone for good. Of

course, there is also no provision for fuel subsidy in the revised

2020 budget, because we just cannot afford it.

 

7.  Gentlemen, the cost of fuel subsidy is too high and

unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413 Trillion

Naira. That is an average of 743.8 billion Naira per annum. According

to figures provided by the NNPC, the breakdown of the 14-year subsidy

is as follows:

 

– In 2006       Subsidy was 257bn

– In 2007       Subsidy was 272bn

– In 2008       Subsidy was 631bn

– In 2009       469bn

– In 2010       667bn

– In 2011       2.105tn

– In 2012      1.355tn

– In 2013      1.316tn

– In 2014      1.217tn

– In 2015       654bn

– In 2016       Figure Not Available

– In 2017      Subsidy was 144.3bn

– In 2018      730.86bn

– And in 2019   Subsidy was 595bn

 

8.  The Federal Government is not unmindful of the pains associated with

higher fuel prices at this time. That is why we will continue to seek

ways to cushion the pains, especially for the most vulnerable

Nigerians. The government is providing cheaper and more efficient fuel in form of auto gas. Also, Government, through the PPPRA, will ensure that

marketers do not exploit citizens through arbitrarily hike in pump

prices. And that is why the PPPRA announced the range of prices that

must not be exceeded by marketers.

 

9   In spite of the recent increase in the price of fuel to 162 Naira

per litre, petrol prices in Nigeria remain the lowest in the

West/Central African sub-regions. Below is a comparative analysis of

petrol prices in the sub-regions (Naira equivalent per litre);

– Nigeria              – 162 Naira per litre

–  Ghana               –  332 Naira per litre

–  Benin                 – 359 Naira per litre

–  Togo                   – 300 Naira per litre

–  Niger                   – 346 Naira per litre

–  Chad                   – 366 Naira per litre

–  Cameroon           – 449 Naira per litre

–  Burkina Faso      –  433 Naira per Litre

–  Mali                     – 476 Naira per litre

– Liberia                 – 257 Naira per litre

– Sierra Leone        – 281 Naira per litre

– Guinea                 – 363 Naira per litre

– Senegal               – 549 Naira per litre

 

10. Outside the sub-region, petrol sells for 211 Naira per litre in

Egypt and 168 Naira per litre in Saudi Arabia. You can now see that

even with the removal of subsidy, fuel price in Nigeria remains among

the cheapest in Africa.

 

ELECTRICITY TARIFF

 

11. Another issue we want to address here today is the recent

service-based electricity tariff adjustment by the Distribution Companies, or

DISCOS. The truth of the matter is that due to the problems with the

largely-privatized electricity industry, the government has been

supporting the industry. To keep the industry going, the government

has so far spent almost 1.7 trillion Naira, especially by way of

supplementing tariffs shortfalls. The government does not have the

resources to continue along this path. To borrow just to subsidize

generation and distribution, which are both privatized, will be

grossly irresponsible.

 

12. But in order to protect the large majority of Nigerians who cannot

afford to pay cost-reflective tariffs from increases, the industry

regulator, NERC, has approved that tariff adjustments had to be made

but only on the basis of guaranteed improvement in service. Under this

new arrangement, only customers with guaranteed minimum of 12 hours of

electricity can have their tariffs adjusted. Those who get less than

12 hours supply will experience no increase. This is the largest group

of customers.

 

13.  Government has also noted 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, and creating

thousands of jobs in the process. NERC will also strictly enforce the

capping regulation to ensure that unmetered customers are not charged

beyond the metered customers in their neighbourhood. In other words,

there will be no more estimated billings.

 

14. The government is also taking steps to connect those Nigerians who

are not even connected to electricity at all. As you are aware, under

its Economic

Sustainability Plan, the government is providing solar power to 5

million Nigerian households in the next 12 months. This alone will

produce 250,000 jobs and impact up to 25 million beneficiaries through

the installation, thus ensuring that more Nigerians will have access

to electricity via a reliable and sustainable solar system.

 

15. Gentlemen, please note that despite the recent service-based

tariff review, the cost of electricity in Nigeria is still cheaper or

compares favourably with that of many countries in Africa.

 

COST IN NAIRA PER KWH IN SOME AFRICAN COUNTRIES.

– Nigeria            49.75

– Senegal          71.17

– Guinea            41.36

– Sierra Leone   106.02

– Liberia              206.01

– Niger                59.28

– Mali                  88.23

– Burkina Faso    85.09

– Togo                  79.88

 

CONCLUSION

16. Gentlemen, the timing of these two necessary adjustments, in the

petroleum and power

sectors, has raised some concerns among Nigerians. This is a mere

coincidence. First, the deregulation of PMS

prices was announced on 18 March 2020, and the price modulation that

took place at the beginning of this month was just part of the

on-going monthly adjustments to global crude oil prices.

 

17. Also, the review of service-based electricity tariffs was

scheduled to start at the beginning of July 2020 but was put on hold so

that further studies and proper arrangements can be made. Like Mr.

President said today, at the opening of the Ministerial Retreat, this

government is not insensitive to the current economic difficulties our

people are going through and the very tough economic situation we face

as a nation. We certainly will not inflict hardship on our people.

But we are convinced that if we stay focused on our plans, brighter

and more prosperous days will come soon.

 

18. The opportunistic opposition and their allies are playing dirty

politics with the issue of petrol pricing and electricity tariff.

Please note that these naysayers did not complain when the price

adjustment led to lower petrol prices on at least two occasions since

March. Nigerians must therefore renounce those who have latched onto

the issue of petrol pricing and electricity tariff review to throw the

country into chaos.

 

19. I thank you all for your kind attention