The President, Muhammadu Buhari, has on Monday said it would be grossly irresponsible to borrow to subsidise electricity tariff while the economic crunch orchestrated by COVID-19 pandemic is on.
The President said this on Monday during his second-term First Year Ministerial Performance Review Retreat in Abuja.
Buhari also said no provision was made for fuel subsidy in the Revised 2020 Budget, stressing that about N1.7trn has been spent on tariff shortfalls to support the electricity sector since its privatisation.
According to the president, under the new arrangement, only customers who get electricity for 12 hours and above per day would have their tariff increased.
Speaking on Monday, the President said the government revenue had shrunk by 60 per cent due to the COVID-19 pandemic but the government was not considering borrowing to fund subsidy for electricity and petrol.
His words, “The COVID-19 has led to a severe downturn in the funds available to finance our budget and has severely hampered our capacity.
“One of the steps we took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown was the deregulation of the price of premium motor spirit such that the benefit of the lower prices at the time was passed on to consumers.”
Speaking, the president continued that the effect of the deregulation is that pump prices of petrol would change with the changes in global oil prices. This means quite regrettably that as oil prices go higher, we could see some increases in pump price.
He emphasised, “This is what has happened now when global prices rose, it meant that the prices of petrol locally will also go up.”
“There are several negative consequences if the government should go back to the business of fixing or subsidising petroleum or PMS prices.
“First of all, it will mean a return to the costly subsidy regime. Today, as we’ve heard, we have 60 per cent less revenue. We simply cannot afford the cost.”
He highlighted the second danger as the potential return of fuel queues which has thankfully become a thing of the past. “Nigerians no longer have to endure long queues just to buy petrol often at highly inflated prices.”
Accordingly, he said, “Also, there is no provision for fuel subsidy in the Revised 2020 Budget simply because we are not able to afford such a cost.
If reasonable provision, he continued, must be made for health, education, and other social services, we simply cannot sustain petroleum subsidies.
