President Olusegun Obasanjo has said that the removal of subsidy from petroleum products is part of the process of deregulation that the government believes is the best solution to the problem of instability in the oil sector.
In a broadcast yesterday (June 15, 2000), President obasanjo defined deregulation as government non-interfering in the oil industry.
He spoke against the backdrop of the recent hike in the price of petroleum products and the protracted negotiation with the NLC that led to a compromise price for the products.
The Speech Follows:
"Fellow Nigerians,
I wish to address you today on the events of the past week, relating to the recent increase of the prices of petroleum products.
"The government finds it most unfortunate chaos, with many Nigerians experiencing hardship as services were disrupted throughout the country. The nation lost many man-hours that we could hardly afford in the present economic circumstances.
"As a result of very intense discussions between the government and the Nigeria Labour Congress. I am sure most of you felt a sense of relief as we have managed to put behind us this unpleasant episode. The event was all together a major test for our democracy that had just celebrated the first anniversary. The greatest virtue of democracy is dialogue, and Nigerians should be proud that the spirit of democracy triumphed in the situation.
"By now, you must all be enjoying the return of calm and are going about your normal businesses. And I expect the marketers to honour the terms of the memorandum of understanding reached between the NLC and the government, and are thus charging the stimulated prices for fuel and other petroleum products.
"In particular, I wish to appeal to the operators of public transport services, where fares were raised by as much as 50 per cent to revise transport fares accordingly. An assessment of this sector reveals that the fuel component of transport operation varies from two to seven per cent. Therefore, there is no rational basis for the recent 50 per cent hike on transport fares.
"Fellow Nigerians, let me reiterate our administration's unequivocal commitment to national reconstruction and rebirth. The imporvement of the quality of life for all Nigerians and revival of our economic fortunes are the cardinal aims of all our economic decisions and policies. Thus, under no circumstances will this administration embark on any policy or take any decision that will be injurious to the best interest of Nigerians.
"Government is determined to ensure that there shall be no shortage of scarcity of petroleum products in a country like ours that is blessed with this special resource. Fuel queues at petrol stations have disappeared in Nigeria and this government is firmly resolved that the situation of stress and shame associated with fuel scarcity will not re-occur.
"In order to ensure uninterrupted supply of petroleum products, NNPC had had to embark on massive importation, the resultant impact of which was substantial resource gap, hence the significant subsidy of about N20 billion in the first quarter of this year.
"Fellow Nigerians, you may wish to ask why our refineries are not operational after one year of good governance.
"They key reason is that the Turn-Around-Maintenance(TAM) of two of the refineries were awarded by previous administrations to firms that did not possess the required technical competence. Yet substantial payments had been effected before we took office. Therefore, to cancel such contracts would have translated into huge losses for government. A third refinery, the one at Warri, had a major accident necessitating a shut down for serious repairs. I can now confirm that one of the refineries will, God willing be fully operational by the end of this year.
"Fellow countrymen, removal of subsidy is part of the process of deregulation that the government believes is the best solution to the problem of instability in the oil sector.
"What exactly does deregulation mean? First of all, deregulation means that the government will stop interfering in the oil industry. Marketers will be free to import and sell at prices that are no longer determined by the NNPC. One direct consequence is that prices of fuel will vary from fuel station to fuel station, giving consumers the choice. With deregulation, adjustment of prices will not always be upwards; prices may fall from time to time.
"After deregulation, the monster of fuel scarcity will be tamed, as shortfalls resulting from some disruption in the supply chain can be taken care of fairly rapidly through imports at appropriate prices. Thus the prolonged nationwide fuel scarcity with disruptive impact on other economic sectors will no longer re-occur. It is hoped that the special committee, soon to be set up, will thoroughly examine all aspects of deregulation, and come up with appropriate recommendations. Let me assure all Nigerians that government will effectively implement any such recommendations so as to free the nation from the cyclical crises associated with increase in prices of petroleum products.
"In conformity with our government's pledge to uplift the living standard of our workers, the minimum wage bill has now been signed into law. All employers of labour are expected to comply with the new law.
"You would recall that as part of the negotiations for the national minimum wage, an automatic increase of 25 per cent will become effective next year and a 15 per cent increase by 2002. This, of course, is conditional on the performance of the economy and production output, as well as availability of additional revenue for all the tiers of government.
"Fellow Nigerians, as we put the recent crisis behind us, let me emphasise the need for peaceful dialogue, tolerance, respect for the rule of law, due process, and orderly progress. As a caring government, strongly committed to the well-being of all Nigerians, let me assure you of our determination to execute development programmes that will raise the quality of life of our citizens.
"Let this triumph of democracy renew our strength as we face the challenges of development in our march towards the promised land."
| Retail Prices of Petroleum Products (1973-2000)-(In Naira) |
| Product |
1973 |
1979 |
1986 |
1990 |
1990 |
1993 |
1994 |
1997 |
2000* |
2000** |
| Petrol |
0.09 |
0.15 |
0.39 |
0.51 |
0.70 |
3.25 |
11.00 |
20.00 |
30.00 |
22.00 |
| Diesel |
0.08 |
0.11 |
0.29 |
0.35 |
0.50 |
3.00 |
9.00 |
19.00 |
29.00 |
21.00 |
| Kerosene |
0.08 |
0.15 |
0.10 |
0.15 |
0.40 |
2.75 |
6.00 |
17.00 |
27.00 |
17.00 |
| Fuel oil |
0.26 |
0.05 |
0.19 |
0.30 |
0.50 |
2.50 |
9.00 |
12.4 |
-
- |
2000* = Original Increase
2000** = Revised Pricing
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