The federal government has said that the recent increase in the pump price of Premium Motor Spirit (PMS), otherwise known as petrol, is due to the announcement of a positive outcome in the final stage trial of the coronavirus vaccine being developed by American pharmaceutical giant, Pfizer Inc in collaboration with BioNTech.
The explanation follows the public outcry and criticisms that have greeted the petrol price increase.
Minister of State for Petroleum Resources, Timipre Sylva, during an interaction with State House correspondents on Monday pointed out that the announcement by Pfizer – that its COVID-19 vaccine is over 90% effective – triggered a slight increase in the price of crude oil in the global market.
He said, “What happened recently was because of the announcement of a vaccine for Covid-19 by Pfizer. With that, crude oil prices went up a little bit.
“If you have been following crude oil prices, you would have seen that crude oil prices went up a little bit as a result of this announcement. So, when crude oil prices go up a little bit, then you will see that (it will) instantly reflect on the price of petrol, which is a derivative of crude oil.”
He continued, “When the price of crude oil goes up, then it means that the price of the fixed stock has gone higher; it will also affect the price of the refined product and that is why you see that product prices are usually not static, it depends on the price of crude oil which goes up and down.
“That is why we say, deregulate so that as the price goes up or down, you begin to go up and down as well at the pump. Before now, we fixed it – which was not optimal for us as a country.”
Sylva prices may crash again to a much lower figure, like was experienced in March 2020, if the price of crude drops again.
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Sylva also described the removal of petrol subsidy as an appropriate action because it favours only the elite at the expense of the poor. He said if prices of diesel and kerosene, which are petroleum products used by the poorest people of the society had long been deregulated, it would be unfair not to deregulate the price of petrol consumed mainly by the rich.
According to him, end-users of diesel, for instance, are peasant farmers whom he said regularly transport their farm produce through trucks, powered by diesel, adding that users of kerosene are also the masses who cannot afford to buy cars.
He wondered why deregulating the petroleum downstream sector would generate issues when products mainly consumed by poorer people have long been deregulated.
He said: “Look at it, a situation where diesel has been deregulated long ago, a situation where kerosene has been deregulated long ago, and these are the fuels that the poorest and lowest people in Nigeria interacted with more.
“Why do I say that? If you want to transport food from the North to the South, it will be by trucks that are run by diesel, not with petrol. Those trucks that transport food from the North to the South are usually run by diesel. Kerosene is the preferred fuel at the lowest level of our society. These have been deregulated long ago. So, what is the problem with deregulating petrol, which is mostly used by the elite?
“Let us be fair to this country. Let us be fair to the poor people of the country. If we have deregulated what they were using, then there is absolutely no reason to subsidise petrol. I feel so. The only explanation for everything we have said is the country just could not afford subsidy anymore.”
Sylva explained that if the subsidy regime continues in the face of the drastic fall in the prices of crude oil in the global market and oil production cut by the Organisation of Petroleum Exporting Countries (OPEC), the federal government would get to the level where it would be unable to pay salaries after paying subsidy.