Contrary to expectations that the signing of the Petroleum Industry Act (PIA) would automatically commence the deregulation of the downstream
sector, especially the removal of subsidy, the Federal Government, yesterday, said the retail price of Premium Motor Spirit, otherwise called petrol, will remain at N162 per litre until a feasible framework is developed.The Guardian had earlier reported that the government spent N438.37 billion on subsidy payments as of June 2021. The removal of subsidy will lead to an upward review of petrol retail price, rising to at least N400 a litre.
With oil prices experiencing a rebound, the Federal Government might continue to find it difficult to sustain subsidy payments, or even borrow to fund subsidies, but continue to avoid a backlash from households dealing with poverty and inflation.Subsidy payments have continued to rise, not just due to low production, but as a result of the surge in consumption, especially from smuggling and other related activities.
ON the PIA, the Minister of State for Petroleum Resources, Timipre Sylva, while addressing journalists, yesterday, in Abuja, insisted that the three per cent allocation to host communities and 30 per cent profit share allocated to the development of frontier basin were justifiable, while a workable framework was needed for petrol to dispense at prevailing market price.He equally noted that there was a need for investment that would drive the country’s reserves and daily production.
Speaking on the divestment of assets by International Oil Companies, especially Shell, Sylva said discussions were on with the company, adding that the company is not only divesting in Nigeria, but across the world.Fitch Ratings, a global credit rating agency, yesterday, noted that the sweeping changes to the fiscal and regulatory environment are meant to shepherd in a renewed era of oil and gas investment.
Also, the All Progressives Congress has admitted that the controversial Petroleum Industry Bill assented to by President Muhammadu Buhari on Monday is not a perfect document. EARLIER, Rivers State Governor, Nyesom Wike, had said there may be a lot of crisis if the three per cent equity shares contained in the newly signed PIA are paid directly to host communities without any government intervention.Speaking on Channels TV Sunrise Daily on Tuesday, Governor Wike said there is a need for government to monitor the spending of the money that would accrue to host communities to avert the impending crisis.
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