Why we can’t reverse subsidy removal, electricity price hike –Buhari

President Muhammadu Buhari has ruled out any likehood of returning to payment of subsidy on petroleum products, saying it would lead to several negative consequencies.

This is even as he said his administration has spent almost N1.7 trillion supplementing tariffs shortfalls to keep the electricity industry going. The president who said he was disappointed with the services of Distribution Companies (DISCOs) said with dwindling resources, it was no longer sustainable to fund energy subsidies.

Buhari, represented by Vice President Yemi Osinbajo, spoke, yesterday, when he declared open a two-day first year ministerial performance review retreat at the State House Conference Centre, Abuja.

The president said COVID-19 pandemic had led to a severe downturn in the funds available to finance the nations’ budget and also hampered government’s capacity.

He said one of the steps taken at the beginning of the crisis in March, when oil prices dipped at the height of the global lockdown, was the deregulation of downstream petroleum sector, especially on Premium Motor Spirit (PMS).

Buhari however, assured that government was working towards mitigating the impact of deregulation on citizens.

“There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising PMS prices. First of all, it would mean a return to the costly subsidy regime. Today, we have 60 per cent less revenues, we just cannot afford the cost. The second danger is the potential return of fuel queues, which has, thankfully, become a thing of the past under this administration.

“Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices. Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services.’’

He described as coincidental the timing of the adjustments in prices of patrol pump price and power tariff. The president said government was extremely mindful of the pains that higher prices meant at this time.

He said government did not take the sacrifices that Nigerians had to make for granted.

“We will continue to seek ways and means of cushioning pains, especially for the most vulnerable in our midst.We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.

“This is the role government must now play through the Petroleum Products Pricing Regulatory Agency (PPPRA). This explains why the PPPRA 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.’’

Buhari said the recent service-based tariff adjustment by the Electricity Distribution Companies (Discos) had also been a source of concern for his government.

The president said like many Nigerians, he had been unhappy with the quality of service given by the Discos, but there were many constraints, including poor transmission and distribution capacity. He said he already signed off on the first phase of the Siemens project to address many of the issues.

“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry. So far, to keep the industry going, we have spent almost N1.7 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 borrow to subsidise 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.’’ he said.

First Reported by Daily Sun