THE Federal Government could no longer bear the burden of petrol subsidy, hence the decision to increase pump price of Premium Motor Spirit (petrol).
In a statement on Thursday, Minister of State for Petroleum Resources, Timipre Sylva said that the Federal Government never promised to keep the pump price PMS permanently low.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians,” the minister said.
Sylva also said in the statement titled: ‘Deregulation: The facts and the reasons behind the policy,’ that deregulation meant that the government would no longer continue to be the main supplier of petroleum products.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers.
“Petroleum products are refined from crude oil. Therefore, the price of crude (the feedstock) for the refining process will affect the price of the refined product.