Following months of uncertainty in which Nigerians endured debilitating shortage of petrol, the Federal Government on Wednesday finally ended the subsidy regime on the product and approved an increase in the pump price.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, disclosed this to State House correspondents at the Presidential Villa, Abuja.

Kachikwu said the decision was reached at a stakeholders’ meeting presided over by Vice-President Yemi Osinbajo and attended by the leadership of the Senate, House of Representatives, the Nigeria Governors’ Forum and labour unions, including the Nigeria Labour Congress, Trade Union Congress, Nigeria Union of Petroleum and Natural Gas Workers, and Petroleum and Natural Gas Senior Staff Association of Nigeria.

The meeting was held inside the vice president’s official residence, the Aguda House.

Kachikwu said while the Petroleum Products Pricing Regulatory Agency would be announcing the new price, he added that it would not be more than N145 per litre.

He said, “Following a detailed presentation by the  Minister of State for Petroleum Resources to the meeting, it has now become obvious that the only option and course of action now open to the government is to take the following decisions:

“In order to increase and stabilise the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies.

“All oil marketers will be allowed to import the PMS on the basis of forex procured from secondary sources and accordingly, the PPPRA template will reflect this in the pricing of the product.

“Pursuant to this, the PPPRA has informed me that it will be announcing a new price band effective today, May 11, 2016, and that the new price for PMS will not be above N145 per litre. We expect that this new policy will lead to improved supply and competition, and eventually drive down pump prices as we have experienced with diesel.”

The minister added, “In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector. It will also prevent the diversion of petroleum products and set a stable environment for the downstream sector in Nigeria.

“We share the pains of Nigerians but, as we have constantly said, the inherited difficulties of the past and the challenges of the current time imply that we must take difficult decisions on these sorts of critical national issues. Along with this decision, the Federal Government has in the 2016 budget made an unprecedented social protection provision to cushion the current challenges.

“We believe in the long term that improved supply and competition will drive down prices.

“The DPR and PPPRA have been mandated to ensure strict regulatory compliance, including dealing decisively with anyone involved in hoarding of petroleum products.”

Kachikwu explained that the meeting where the decision was reached reviewed the current fuel scarcity and supply difficulties in the country as well as the exorbitant prices being paid by Nigerians for the product, which range on the average from N150 to N250 per litre.

The minister said the meeting also noted that the main reason for the current problem was the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings by the government.

The PPPRA, the government agency responsible for fixing petroleum product prices, confirmed that the price of PMS had risen from N86.5 to N145 per litre.

In a statement signed by its Acting Executive Secretary, Mrs. Sotonye Iyoyo, the agency said, “In furtherance of its mandate to ensure the efficient supply and distribution of petroleum products, the PPPRA, hereby announces, effective immediately, that the new price band for the PMS shall be at a maximum of N145/litre. However, the NNPC retail stations on the outskirts of major cities are advised to sell at prices lower than N145/litre.

“This review became imperative in the face of extreme difficulties faced by petroleum product importers in sourcing foreign exchange. To meet the consumption demand of the nation, importers will henceforth be permitted to source for their foreign exchange requirements from secondary sources.”

Oil marketers who spoke with our correspondents on the development stated that the increase in petrol price would not immediately clear the queues at filling stations.

They noted that the government’s resolve to allow marketers source for forex from unofficial sources meant that some dealers might spend as much as N300 per dollar.

While reacting to the announcement, the NLC vowed to resist the increase in the pump price of petrol.

The NLC also put its councils and affiliate unions on notice for immediate mobilisation to resist the increase.

The General Secretary, NLC, Dr. Peter Ozo-Eson, said in a statement that the increase was unilaterally done and only showed the level of insensitivity and impunity of the government.

He said that the Congress had scheduled an emergency meeting of its National Executive Committee for Friday.

The NLC called on the Federal Government to revert the price to N86 and N86.50 or face the ire of the labour movement and its civil society allies.

The NLC said in the statement, “The unilateral increase in the price of petrol by the government represents the height of insensitivity and impunity, and shall be resisted by the Nigeria Labour Congress and its civil society allies.

“With the imposition on the citizenry of the criminal and unjustifiable electricity tariff, and resultant darkness and other economic challenges brought on by the devaluation of the naira and spiralling inflation, the least one had expected at this point in time was another policy measure that would further make life more miserable for the ordinary Nigerian.

“The latest increase is the most audacious and cruel in the history of petroleum product price increase as it represents not only about 80 per cent increase, but is tied to the black market exchange rate.”

However, the President of the TUC, Mr. Bala Kaigama, said that the congress could only speak on the increase after a meeting of its organs.

Both NUPENG and PENGASSAN said they would on Thursday (today) and Friday deliberate on the new pump price.

The South-West Chairman of NUPENG, Alhaji Tokunbo Korodo, disclosed this in an interview with the News Agency of Nigeria in Lagos on Wednesday.

According to him, it is too early to make any official statement until the two bodies meet to deliberate on the matter.

He said that the meeting would discuss the new development and come up with a stand on the matter.

However, the Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, commended the decision of the government to liberalise the petroleum downstream sector given the acute resource constraint that the country currently.

“The overregulation of the sector and the subsidy regime had put enormous pressure on government finances and on our foreign reserves. It was evident that the policy choice was not sustainable. The review is in the long term interest of the economy and the people,” he said.

The Managing Director and Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said, “It (fuel subsidy removal) is an excellent economic policy move and you will see the effects very soon, because the current system is not working. It costs as much to administer as it costs to buy the fuel. So, if you now take away the cost of administration, then effectively the price of fuel will come down.

“That is the first big step in the direction of a deregulated and perfect market. Whatever the price is, if it is determined by the market, it will come down. Markets are by nature efficient. After this move, the next thing that will happen is that we will have fuel everywhere in the country. And it will increase productivity and bring down inflation.”

The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, said the government had taken a good step forward with the decision.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, said, “We are looking for deregulation. If that is deregulation, we believe it is a step in the right direction. But we have not been officially communicated,” he said.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mr. Mike Osatuyi, said, “The move is fantastic. That is what we have been clamouring for and we are going to have peace in the country. There is going to be price differential and competition in the market.”

Similarly, the President, Manufacturers Association of Nigeria, Dr. Frank Jacobs said the removal of the fuel subsidy was a step in the right direction.