President Buhari says fuel subsidy removal irreversible, electricity tariff increase necessary

President Muhammadu Buhari addresses Nigerians on COVID-19

President Muhammadu Buhari on Monday said that the total removal of subsidy on petrol is irreversible and the increase in electricity tariff by Distribution Companies (DisCos) was necessary.

The President noted that even though the situation worries him, it would not be reversed.

Buhari however noted that his administration was doing everything possible to mitigate the impact of the hikes on citizens and as well as save the economy from collapsing.

He also expressed displeasure over the quality of service being rendered by the DisCos to Nigerians.

The President who was represented by Vice President Yemi Osinbajo at a 2-day First Year Ministerial Performance Review Retreat at the State House Conference Centre in Abuja, further said that the COVID-19 pandemic compelled his administration to make some necessary far-reaching adjustments for long-term gains.

He noted that there would be negative consequences if the government should reinstate petrol subsidy.

“As you all know when oil prices collapsed at the height of the global lockdown, we deregulated the price of premium motor spirit (PMS) such that the benefit of lower prices was passed to consumers. This was welcomed by all and sundry.

“The effect of regulation though is that PMS prices will change with changes in global oil prices. This means, quite regrettably, that as oil prices recover, we would see some increases in PMS prices. Today we have 60 percent fewer revenues, we just cannot afford the cost.

“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration. Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices. Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now have no choice.

“Nevertheless, I want to assure our compatriots that government will remain alert to its responsibilities. The role of government now is to prevent marketers from raising prices arbitrarily or exploiting citizens. This is the role that government must now play through the Petroleum Products Pricing Regulatory Agency (PPPRA).

“This explains why the PPPRA made the announcement a few days ago setting the range of price that must not be exceeded by marketers. The advantage we now have is that anyone can bring in petroleum products and compete with marketers, that way the price of petrol will be kept coming down,” he said.

Electricity tariff increase necessary
President Buhari also said that his government had spent N1.7trillion to supplement tariff shortfalls, adding that it would no longer continue.

“Let me say frankly that like many Nigerians, I have been very unhappy about the quality of service given by the Discos, but there are many constraints including poor transmission capacity and distribution capacity.

“I have already signed off on the first phase of the Siemens project to address many of these issues.

“Because of the problems with the privatisation exercise, government has had to keep supporting the largely privatised electricity industry.

“So far, to keep the industry going we have spent almost N1.7tn, especially by way of supplementing tariffs shortfalls.”

“The NERC (Nigerian Electricity Regulatory Commission), the industry regulator, has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

“Under this new arrangement, only customers who are guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted.

“Those who get less than 12 hours supply, or the B and D and E customers must be maintained on lifeline tariffs, meaning that they will experience no increase. This is the largest group of customers.”

He also noted that his administration had taken notice of the complaints about arbitrary estimated billing, adding that a mass metering programme for over five million Nigerians was being undertaken.

Buhari also noted that NERC had committed to strictly enforcing the capping regulation which would ensure that unmetered customers were not charged beyond metered customers in their neighbourhood.

“In other words, no more estimated billings,” the President declared.

“It is important to stress that this is coincidental in the sense that the deregulation of PMS prices happened quite some time ago, it was announced on March 18, 2020 and the price moderation that took place at the beginning of this month was just part of the ongoing monthly adjustments to global crude oil prices.

“Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.

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