Prepare For Fuel Price Hike In January - Fg Tells Nigerians

NIGERIANS have been told to prepare for fuel price hike as the Federal Government has concluded plans to increase prices of petroleum products, including that of petrol by gradually removing the subsidies the products are currently enjoying.


This was made known by members of the nation’s Economic Management Team (EMT) in an interview with journalists in Lagos on Monday.


The team comprised prominent members of the Federal Executive Council such as the Minister of Finance, Shamsudeen Usman; that of National Planning, Senator Sanusi Daggash; the Minister of State for Petroleum, Odein Ajumogobia, and the Directors-General of the Debt Management Office (DMO) and the Bureau of Public Enterprises (BPE), among others.


Ajumogobia, who stated that the move already had the blessing of President Umar Yar’Adua, said the planned hike was premised on the dual reasoning in government quarters that the subsidies on such products never get to the masses for whom they are meant, but rather ended up in the wrong pockets.


According to him, a subsidy of as much as N700 billion had so far been given on petroleum products by the government this year alone, despite this, the final consumer for whom the subsidy is meant still ends up paying the full price.


“Where then does the subsidy go? In whose pockets do they end?” Usman asked.


He stated that the second reason for the planned hike was the attempt to gradually make petroleum product pricing more competitive within the country so as to attract investment into the sector.


“Despite the huge demand and potential for petroleum products, most investors still shy away from putting their funds into building or running refineries simply because the products’ prices are non-competitive and do not make for lucrative business, thereby scaring investors from the ventures,” he stressed.


The team would, however, not disclose by what extent the subsidy would be removed or by what percentage petroleum prices would be hiked come January.


The team emphasised that it was not unaware of the emotive nature of petroleum products pricing in the country, and added that the Federal Government would graduate the subsidy removals and price increases to alleviate the sufferings of the masses.


“We are aware of the interface between fuel prices and the prices of other products and the Federal Government will put in place adequate measures to buffer the effects of the planned hike. We are also working with organised labour and the private sector to ensure that smooth arrangements are made on the issue,” Usman stated.


Ajumogobia added that the truth of the Nigerian petroleum situation is that “we will continue to import fuel for the next 45 years in significant quantities, and it is equally a myth that improved operations in the country’s refineries will reduce petroleum product prices. In fact, we do not expect the refineries to start operating in appreciable capacity in the near future.”


Speaking earlier, Usman had indicated that contrary to widely held opinion about the 2008 budget, it was actually being implemented and “about 77 per cent of capital votes in the approved budget has already been released to date.


“In spite of the fact that the National Assembly is yet to assent to the slightly lower budget proposal by the executive arm, the president is allowed by law to spend as much as was spent in the previous year’s budget.


“When the proposed budget of N2.567 trillion is eventually passed, as we believe it will be, it will commence being implemented with adjustments made in the last quarter of the year.”


He said that in order to get an early passage of the budget for 2009, presentations would be made to the National Assembly as early as October 2008 on it.


http://www.nigeriamasterweb.com/paperfrmes.html