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Deregulation: Expect fuel price hike – FG

By Victor Ahiuma-Young & Oscarline Onwuemenyi
ABUJA — THE Federal Government, on the second day of its meeting with leaders of the Nigeria Labour Congress, NLC, yesterday, admitted that its planned deregulation of the downstream sub-sector of the petroleum industry will lead to an increase in the pump price of petrol.

The government’s open admission however contradicts the position of the Nigerian National Petroleum Corporation, NNPC, which, also yesterday, said the planned deregulation of the downstream sector of the petroleum industry would not necessarily lead to a hike in the price of petroleum products.


At yesterday’s meeting which took place at the Labour House, Abuja, were four ministers — Finance, Dr. Mansur Muktar, who led the government team; Petroleum Resources, Dr. Rilwanu Lukman; Labour, Prince Adetokunbo Kayode (SAN) and Minister of State for Petroleum, Mr. Odein Ajumogobia (SAN) and Chief Economic Adviser, Tanimu Yakubu.

On the side of the Labour were the NLC President, Comrade Abdulwaheed Omar; Deputy President, NLC, Peter Adeyemi; General Secretary NLC, Comrade John Odah; President of NUPENG, Comrade Peter Akpatasson and other members of the NLC National Executive Committee.

Addressing the NLC leaders, the government representatives said deregulation was inevitable if the nation must move forward and that, in truth, it would bring about price increase.

Minister of State for Petroleum, Mr. Ajumogobia said the issue of deregulation was more about finance than petroleum, saying that was why the government team was led by the Minister of Finance.

According to him, “It is about finance. You asked if there will be a price increase. The answer is yes. Price will go up if deregulation starts. When we had discussion with the traditional rulers, after all we said, the question they asked was: ‘will price of fuel increase? The truth is that the price will increase.”

He argued that the investors who agreed to establish refineries in the country said they could not do so under government-controlled price regime.

The Minister of State drew examples from Libya and Angola, where he said their refineries were working perfectly and posited that the panacea to the problems in the sector was deregulation, where prices would be determined by market forces.

In the same vein, the Minister of Labour, Prince Adetokunbo Kayode agreed that the position of labour on the issue could be justified because the inefficiency in the sector had been going on for over 25 years and noted that the situation was like this because change is always difficult to easily accept.

Also, the Minister of Finance, Dr. Mansur Mukhtar, said it was unacceptable that Nigeria, a major oil producing country and a member of the Oil Producing Exporting Country (OPEC), was still importing petrol for domestic consumption.

He pointed out that there were leakages and inefficiency in the system, adding that the refineries too were not working to capacity because of the Niger Delta crisis, which has now been resolved.

Mukhtar regretted that the government gave out five licences for refineries in 2005, but only two made appreciable progress while others were revoked.

He stated that the key issue was how to ensure availability of fuel, build good roads, rail lines, and channel funds to health, education, infrastructure, and other areas that needed development.

The Labour minister added that the government was already making serious efforts to address the demands of labour, which they insisted should be in place before the policy could commence.

Presenting labour’s position, General-Secretary of the NLC, Comrade Odah wondered why Nigeria should be the only OPEC member that imports fuel.

He said the situation in Nigeria cannot be compared with that of Libya and Angola, which the government team was trying to use to justify their position.

After the interactive session, the NLC held a closed-door NEC meeting to deliberate on the issue in order to come out with a new position, if possible.

Comrade Omar said the NEC would be meeting to consider the position of the government on the issue.

Deregulation not synonymous to price hike — NNPC

Meanwhile, contrary to the government’s position, the Nigerian National Petroleum Corporation insisted yesterday that the planned deregulation would not necessarily lead to a hike in the price of petroleum products.

Group Managing Director of the NNPC, Dr. Mohammed Barkindo, who spoke while presenting a paper entitled: “The Oil and Gas Industry – Mainstay of the Nigerian Economy”, at the National Defence College, in Abuja, explained that deregulation was not synonymous with price increase, arguing that the reform was aimed at increasing local refining capacity to end the circle of dependence on importation.

He noted that importation was one of the factors responsible for the high price of products and huge subsidies paid by the Federal Government.

Barkindo who averred that the availability of petroleum products was essential for deregulating the downstream, assured the nation that the corporation has ample supply of products across the country and therefore there was no fear whatsoever of shortage of petroleum products especially under the transition period towards deregulating the downstream sector.

He added, “It (deregulation) is timely and I don’t think it is in the interest of anyone to delay the decision on this very important policy plank of the energy reform of government. The entire reform agenda of government is predicated on a deregulated environment.

“Therefore, we cannot compromise this very important policy plank of government which industry has already aligned itself to.”


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