November 20, 2008

We Won’t Reduce Fuel Prices, Says FG

Hopes that the falling crude oil prices would lead to cheaper petroleum products in Nigeria have been dashed by the Federal Government.
The Federal Executive Council (FEC) at the end of its weekly meeting yesterday foreclosed any pump price reduction.
Minister of State for Energy (Petroleum), Mr Odein Ajumogobia, while briefing State House Correspondents, said the inability of the government to opt for a reduction in the domestic prices of petroleum products is because the sector is not deregulated.
The latest pronouncement of the Federal Government would seem to contradict earlier positions that the periodic hikes in the prices of petroleum products resulted from high price of crude oil in the international market, since Nigeria imports a significant percentage of what it consumes because of the inadequacy of local refining.
But the price of crude oil has fallen from a high of $147 per barrel last July to below $54 a barrel by yesterday.
U.S. crude fell to $53.30 a barrel, its lowest since January 2007, while London's Brent crude (equivalent of Nigeria’s Bonny Light) was off 54 cents at $51.30.
The current petrol pump price of N70 per litre was fixed when crude oil was selling for $80 per barrel June last year.
It had been expected – and government had consistently argued – that lower crude oil prices would lead to lower pump prices.
Ajumogobia said: “We can't enjoy the benefit of deregulation because it's only Automotive Gas Oil - AGO (diesel) that's deregulated. PMS (petrol) and kerosene are still regulated. Now we need to take a holistic view of the sector and see how we can put all petroleum products in one basket, so that as the prices go down in the international market, they'll also go down locally.
“However, the implication of that is that if the international prices of petroleum products go up, we'll also have to pay more locally. We need to look at the situation holistically and find a solution. We can’t eat our cake and have it. We agreed with Labour last year that the pump price would be N70. We don’t have a regulated market for PMS. It is something that we are looking at seriously and we will take a decision about it very soon.”
Last May, Ajumogobia had, while making a case for the removal of subsidy, put the total projected cost of subsidy for 2008 at about N700 billion when crude oil was selling for over $100.
“We are trying to be more systematic and thorough in handling the subsidy issue. We cannot sustain it. We believe that we must go through deregulation of the price. We are engaging the stakeholders work with us. The N700 billion subsidy is over N100 billion above this year’s capital vote,” he had said.
He did not say if the subsidy bill would still be as high with crude oil now selling for a little over $50.
In 2003, the Nigerian National Petroleum Corporation (NNPC) took the novel step of reducing petrol price by 50 kobo in line with a slight drop in crude oil price in order to demonstrate the “benefits of deregulation”.
Also briefing the press yesterday, Minister of Information and Communications, Chief John Odey, said FEC had approved a draft bill that would guarantee the security of jobs and freedom of people living with HIV/AIDS from discrimination.
The draft bill provides the legal framework for the prohibition of discrimination against affected people.
He said: “Council approved a proposal for the enactment of a bill for an Act to make provision for the prevention of HIV/AIDS based discrimination and to protect the human rights and dignity of people living with and people affected by HIV/AIDS and the related purpose. The Attorney General and Minister of Justice came to Council with a memo, seeking Council's approval for a bill for an Act to make provision for the prevention of HIV-based discrimination and to protect human rights and dignity of people living with and affected by HIV/AIDS and other related purposes.
“The Act is meant to prevent all forms of HIV-based discrimination in the work places. The Act is fundamental because it would help in the enforcement of fundamental rights of people as well as enhance a more supportive and proactive workforce that does not discriminate against employee for the mere reason that such employee is HIV-positive.”
Towards implementing this, the Council mandated the Minister of Labour to conduct periodic inquiries to ensure compliance and make recommendations when necessary.
He also said to increase generating capacity and sustain the functionality and reliability of existing generating units, the Council approved the award of contract for the supply of combustion inspection materials for Delta IV (4) at Delta electric power Business unit, Ughelli in the sum of N62,042,400 for a period of three months.
FEC also approved the award of contract for the construction of Block/concrete wall fence phase II at the permanent site of the petroleum Training Institute (PTI), Osubi, Okpe LGA of Delta State in the sum of N55,581,499.43 to be completed by the end of December, 2008.

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