The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has said the Federal Government will not reverse the deregulation of the downstream petroleum sector despite concerns over high petrol prices.
Lokpobiri made the statement on Channels Television’s Politics Today on Tuesday while defending the government’s decision to allow market forces to determine petrol prices.
His comments came as the Dangote Petroleum Refinery and other petroleum marketers reduced their depot prices following a decline in international crude oil prices.
Dangote Refinery reduced its petrol depot price from N1,350 to N1,325 per litre, while other marketers also adjusted their prices in Lagos, Port Harcourt, Calabar and Warri.
Despite the reductions, petrol was still selling for about N1,370 to N1,450 per litre in some locations.
Lokpobiri also argued that petrol remains cheaper in Nigeria than in the United States and some African countries.
He said, “In the US, the average, you know, litre 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.”
The minister said Nigeria’s status as an oil-producing country and the presence of the Dangote Refinery did not automatically mean petrol would be cheaper.
He pointed out that the United States, despite being the world’s largest oil and gas producer and having significant refining capacity, still sells petrol at a higher average price than Nigeria.
Lokpobiri maintained that deregulation had encouraged private-sector investment in Nigeria’s oil and gas industry, arguing that the Dangote Refinery would not have survived under a system where government imported petrol and sold it below 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,” he said.
He said the deregulation policy was designed to create opportunities for private investment in the midstream and downstream sectors.
The minister also defended the removal of petrol subsidy, saying the savings were being distributed to 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.
Lokpobiri further argued that high energy prices were not peculiar to Nigeria, noting that consumers in the United States and Europe were also affected by movements in global oil prices.
He said crude oil and petroleum products were traded in a global market, making Nigeria vulnerable to international price movements despite its status as an oil-producing country.
The minister said the government would not reverse the deregulation policy, arguing that the policy was necessary to encourage further investment in the sector.
He also cited the Dangote Refinery’s supply of aviation fuel and rising foreign reserves as evidence of gains in the oil and gas sector.
Lokpobiri added that the Central Bank of Nigeria had recently stated that about 85 per cent of Nigeria’s foreign reserves came from the oil and gas sector.
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