Why we increased fuel price — FG

The Federal Government did not promise to keep the pump price of petrol permanently low, the Minister of State for Petroleum Resources, Timipre Sylva, has said.

Sylva, in a statement Thursday, also said the FG could no longer bear the burden of petrol subsidy.

He said deregulation meant that the government would no longer continue to be the main supplier of petroleum products but would encourage the private sector to take over the role of supplying the products across the country.

According to him, market forces will henceforth determine the prices at the pump.

This, he said, is in line with global best practices where the government will continue to play its traditional role of regulation to ensure that the commodity is not priced arbitrarily by private sector suppliers.

He explained that the regulatory function in the oil sector is like the role played by the Central Bank of Nigeria in the banking sector, “ensuring that commercial banks do not charge arbitrary interest rates”.

The minister said petroleum products were refined from crude oil and therefore the price of crude (the feedstock) for the refining process would affect the price of the refined product.

“When crude oil prices were down, government, through its regulatory functions, ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered. At that time, we indicated that an increase in crude oil prices will also reflect at the pump”, he added.

He said one of the reasons the country had been unable to attract the level of investments desired into the refining sector had been the burden of fuel subsidy.