Against the raging controversy over the recent fuel price hike, former governor of Bayelsa State and Minister of State for Petroleum, Chief Timipre Sylva in this interview with newsmen says the delay in the deregulation of the oil sector was lack of political will by past governments. JOHNCHUKS ONUANYIM captured the report
What is government’s view on the controversy surrounding the removal of fuel subsidy?
I believe that this discussion around subsidy has been a vexed issue that has captured the imagination of this country for a long time now. Successive administrations have attempted to deregulate but sometimes, some administration lacked the political will and at other time, the time was not good for it. And why did I say the time was not good for it?
Does that imply the time is good for it now? The problem around deregulation is that people must understand first and for most, that the product we are talking about is a derivative of crude oil. It is refined from crude oil. Therefore, it has a direct relationship with the price of crude oil. If the price of crude oil goes up, then you expect that it would reflect in the price of the derivative. So, the best time to achieve this we looked at was the time when crude oil prices are low so that Nigerians will get the benefit of those low prices.
In March, when we announced the deregulation, the prices were low and that advantage was transferred to the consumer.
So, we brought down the price of petrol. The unfortunate thing is that when we brought down the price of petrol, nobody reacted in the market place. The prices were the same. Nobody reduced their prices because price of petrol had reduced. Even bus fares, taxi fares were the same. It did not go down when we reduced the pump price of petrol. We thought that those people in the market; the transport drivers and transport owners would reduce their price. But nobody reduced their prices. But anytime there is even a kobo increase in the pump price of product, you see that people will increase their prices triple fold and four fold.
At this moment, let Nigerians not be fooled; there are people who are ready to take advantage of every situation to create anarchy and chaos. And it is this people that are at work now. Is anybody saying that this policy direction is a wrong policy direction?
That is the discussion we should be having. If it is a wrong policy direction why has every successive government attempted to do the same thing? Because it is something that is unsustainable. Subsidy is unsustainable. Let us look at it: Subsidy means that you buy the product at a certain price and then you reduce the price and sell it at a loss to the people. It is something that is good to do. It is something that our president would like to do so much because of his love for the common man. But is it is something that can be sustained in perpetuity?
You get the product and sell it at less at the pump. And that is not the only subsidy. You also subsidise the effects that is used to import the product. So at the end, the subsidy is going on two ways. It is like burning your candle from both ends. How long can that candle last?
So in the wisdom of the President and all of us, we felt that it was time because this subsidy is something that cannot be sustained in perpetuity. It is time for Nigerians to face reality and do the right thing. What is deregulation going to do? It is going to free up a lot more money. At least from the very beginning it will save us up to a trillion and more every year.
Already, we have taken up the budgetary provision for subsidy which is about N500 billion in the budget. Also, we have taken off the excess forex price that special rate that was given to NNPC which also came at a cost. So, all the money that we used to defend the naira at that time to subsidise the dollar will now be freed up for development. And, I believe that going forward, we will begin to see a lot more development, a lot more money available to the government that will be put into critical infrastructure instead of being burnt in our cars.
Looking at subsidy critically, who are the beneficiaries of subsidy?
When a few years ago you have this subsidy scam all over the place all the monies that were taken by the entire subsidy thieves and so on, how many poor people were among those people?
Subsidy only provides opportunity for rich and unscrupulous Nigerians to steal and enrich themselves at our expense, at your expense.
So, ladies and gentlemen, deregulation is actually a policy direction that is good for the common Nigerian. It is going to produce a lot of opportunities. Before now, you would ask: Why has the refining sector not developed?
It is because no refinery can operate commercially in Nigeria with subsidy. If you have a refinery and you refine your product and you are expected to sell it at a subsidised rate, how is the refinery going to make profit and survive? So, nobody wanted to invest in refineries. And that is one of the reasons why our refineries became unsustainable as well because they were refining and selling at a loss. So, every time they came back to government to ask for money.
Anytime any part got bad they had to come back because they were not operating commercially. So, they don’t have money to replace those parts. That was why we were refining and selling at a loss.
What are the anticipated benefits of deregulations?
With deregulation, it means that refineries can operate commercially. And then you can see a lot more investment in that sector and it is going to create a lot of opportunities and jobs for our people.
With deregulation, it also means that marketers can import product by themselves and sell at market rates to Nigerians. It is going to create a lot more activities and opportunities.
So, deregulation is going to really open up. You know what happened in the banking sector with deregulation. We had a few banks but today I cannot count the banks because that sector was deregulated. You see what deregulation did for the airline sector; we had only Nigeria Airways those days.