The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has defended the Federal Government’s deregulation of Nigeria’s downstream petroleum sector, arguing that petrol remains cheaper in the country than in the United States and some other African nations.
Lokpobiri made the statement on Channels Television’s Politics Today on Tuesday while responding to concerns over rising petrol prices following the removal of subsidy.
His comments came amid price reductions by the Dangote Petroleum Refinery and other fuel marketers after international crude oil prices declined.
Dangote Refinery reduced its petrol depot price from N1,350 to N1,325 per litre, while other marketers also lowered their prices in Lagos, Port Harcourt, Calabar and Warri.
Despite the reductions, petrol continued to sell for between N1,370 and N1,450 per litre in some locations.
Speaking on the programme, Lokpobiri compared petrol prices in Nigeria with those in other oil-producing and African countries.
“In the US, the average, you know, liter of fuel is N1,633. In Nigeria, it’s on the average of N1,430. If you go to Cameroon, it’s N1,959. If you go to Ghana, it’s N2,070. If you go to South Africa, it’s N2,070. So Nigeria’s average cost of fuel per litre is still lower than,” he said.
The minister argued that being an oil-producing country and having the Dangote Refinery operating locally did not necessarily guarantee cheaper petrol.
“As at today, the records available show that USA is the highest producer of oil and gas in the world. The United States is the highest producer of oil and gas in the entire world. They also have the highest refining capacity, but the fuel price per liter is higher than that of Nigeria.
“So despite the fact that Dangote Refinery is here, that doesn’t mean that the fuel price will be lower because Dangote Refinery is available. But what is important is that the regulation has also created a new economy.”
Lokpobiri maintained that deregulation had stimulated private investment in Nigeria’s oil and gas industry. He argued that the Dangote Refinery would have struggled to remain viable if the government had continued importing petrol and selling it below the prevailing market price.
“But for the policy of deregulation, Dangote Refinery wouldn’t have been the most attractive IPO in the continent. If government was continuously importing, as NNPC was doing, and selling at a lower price than the market price, Dangote wouldn’t have been able to survive.”
According to the minister, deregulation was designed to create room for private-sector participation and investment across the midstream and downstream segments of the petroleum industry.
“Deregulation all over the world is to enable private sector businesses to thrive and all the businesses that are associated with with the oil and gas sector.”
Lokpobiri also defended the removal of petrol subsidy, saying funds saved from the policy were now being shared among the three tiers of government through the Federation Account Allocation Committee.
“These days we get 2.1 trillion being shared. This is the first time it is happening. You’ll recall that before this government came, about 27 states had no capacity to pay even salaries. Today, states are doing gigantic projects. It’s because of the savings that we made from this subsidy.”
He said the pressure created by high energy prices was not unique to Nigeria, noting that consumers in the United States and Europe were also affected by movements in global energy prices.
“Oil and gas is a global commodity. What is sold in New York is what is also sold here. So, no matter what you may think, America, or Saudi Arabia, or anywhere in the world, energy prices will always be the same.”
The minister said the government had no intention of reversing the deregulation policy despite concerns over the effect of petrol prices on consumers, maintaining that deregulation was necessary to attract further investment.
He also pointed to the Dangote Refinery’s supply of aviation fuel and an increase in Nigeria’s foreign reserves as some of the benefits of developments in the petroleum sector.
Lokpobiri further claimed that the Central Bank of Nigeria had recently stated that 85 per cent of Nigeria’s foreign reserves came from the oil and gas sector.
