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The Federal Government, Sunday, restated the need to deregulate the downstream sector of the oil and gas industry through market-driven pricing of products to boost the nation’s economy.
Minister of State for Petroleum Resources, Mr. Timipre Sylva, who stated this at the News Agency of Nigeria, NAN, Forum in Abuja, also said the country “accidentally” discovered 206 trillion cubic feet of gas reserves while in search of crude oil.
He said: “I will say that my stand on fuel subsidy and deregulation is well-known. I strongly believe that for this country to move forward, for our economy to make the progress it desires, we need to have a market-driven pricing of products.
“A situation where you produce something at a certain cost and you have to sell it at a lower cost to people because you are taking some of that burden off the people is not the best.
“It is a very desirable thing but it is also not too sustainable because what happens is that you produce it for N10, you sell it for N5; tomorrow, you produce it again at N10, you add N5 from somewhere, produce it again at N10 and sell it for another N5.
“So, the losses increase and compound on a daily basis and those accumulated losses have brought us to where we are.”
According to him, people’s view that if the refineries are working, importation of products will stop is not the real issue on ground.
Contending that subsidy was part of the things that made the refineries to stop operating in the country, Sylva said: “Part of the reasons the refineries were not working is subsidy because a refinery that is producing something at a certain cost and selling at a loss cannot sustain itself.
“Over the years, the refineries couldn’t sustain themselves and all of them died. So, if you do not deregulate, you will find out that the refineries, even if you fix them today, cannot be commercially operated because the refineries need maintenance and they need to run.
“If you are producing something and they are selling at a certain subsidised price, it cannot work. That is why you see that the sector is not growing at all.”
He noted that Dangote Group, for example, sited its refinery near the sea to aid exports and enable it make more money for sustainability.
“If he sells within Nigeria in this subsidised environment, he will not break even. So, that is the way it is and we must look at it because, I know that a lot of Nigerians think that we must carry on like this but in the end, I think it is better for us to deregulate,” he said.
He described as unfortunate people’s perception about subsidy, which had made the common man on the street to begin to fight government.
According to him, “subsidy never favours them.”
Speaking further, the minister said: “It is actually in the interest of the common Nigerian to ensure that some people do not just profiteer on them, which is what has been happening.
“You must have heard of all the subsidy scams a few years ago; people were making billions on these same subsidies. And when you say you want to take it out, the common man is the one on the street but at the end of the day, is it the common man that is benefiting? I don’t think they are the biggest beneficiaries.
