We are mindful of pains of higher prices on fuel, electricity-President Buhari

President Muhammadu Buhari has declared that his administration is not unmindful of the pains that higher prices on electricity and petrol mean at this time, assuring Nigerians that he would not take their sacrifices for granted.

The president’s declaration was contained in his opening speech at a two-day First Year Ministerial Performance Review Retreat, which began on Monday at the State House Conference Centre, Abuja.

Represented by Nigeria’s Vice President, Prof. Yemi Osinbajo, the Nigerian leader said that government would continue to seek for ways and means of cushioning the pains of the increase in prices especially for the most vulnerable in the country.

Speaking on the deregulation of the Nigerian petroleum sector, President Buhari said that government would remain alert to its responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.

He said: “This is the role that government must now play through the PPPRA (Petroleum Products Pricing Regulatory Agency).

“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.”


COVID-19 Consequences

Explaining the cause of the increases, President Buhari said that the COVID-19 pandemic has led to a severe downturn in the funds available to finance the country’s budget and has severely hampered the capacity of government.

“One of the steps we took 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.”


President Buhari pointed out the negative consequences that would arise if government should attempt to go back to the business of fixing or subsidizing PMS prices.

According to him, it would imply “a return to the costly subsidy regime,” which Nigeria with “60% less revenues,” cannot afford.

The other implication of continued payment of subsidy on petrol, which the president highlighted, was “the potential return of fuel queues—which has, thankfully, become a thing of the past under this administration.”


Service-based tariff

President Buhari said that the recent service-based tariff adjustment by the electricity distribution companies, (Discos) has also been a source of concern for government.

“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 privatised.

“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.”

President Buhari explained that the Nigerian Electricity Regulatory Commission, NERC, approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

He said that under the new arrangement, “only customers who are guaranteed a minimum of 12hours 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.”

He said government has also taken notice of the complaints of customers about arbitrary estimated billing, adding that a mass metering program was being undertaken to provide meters for over five million Nigerians.


Timing concerns

Speaking on the concerns over the timing of the adjustments in the pricing of fuel and electricity tariff, President Buhari stressed that it was coincidental in the sense that the deregulation of PMS prices happened quite some time ago.

“It was announced on 18 March 2020 and the price moderation that took place at the beginning of this month was just part of the on-going monthly adjustments to global crude oil prices.

“Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.

“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, and 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.”


New deal for small businesses

According to President Buhari, Nigeria’s N2.3trillion Economic Sustainability Plan, would provide different avenues whereby Government will support micro, small and medium enterprises (MSMEs) to enable them respond to the economic challenges of COVID-19.

“This includes safeguarding about 300,000 jobs in 100,000 MSMEs by guaranteeing off-take of priority products; and Survival Fund to support vulnerable SMEs in designated vulnerable sectors in meeting their payroll obligations and safeguarding jobs from the shock of COVID-19,” he stated.

Setting the context for the retreat, Secretary to the Government of the Federation, Mr. Boss Mustapha, said that would provide opportunity for government to review the first year report of the ministerial mandate with respect to commitment to deliver on the nine priority areas of the administration.

Ministers, permanent secretaries and top government officials are attending the retreat.



Source: Voice of Nigeria