The continued regulation of the pump price of Premium Motor Spirit, popularly called petrol, is causing stagnation and impoverishment of the masses, the Federal Government has said.
Speaking through the Petroleum Products Pricing Regulatory Agency, the government stated that it was high time that the regulation of the downstream oil sector was fully halted.
Providing answers to frequently asked questions on deregulation in a document made available to our correspondent in Abuja on Sunday, the PPPRA stated that petrol was rarely sold at the approved rate in most states.
This, it said, was why it had become vital to fully deregulate the cost of the commodity, as its continued regulation was mainly benefiting the rich at the expense of the poor masses.
The agency said, “The regulation of the downstream sector is one of the reasons for the stagnation and impoverishment of the masses.
“Apart from Lagos, Abuja and Port Harcourt, people rarely buy petroleum products at official prices. In some rural areas, you find out that most times these products are adulterated and bad for engines.
“Deregulation will change all that and even reduce the cost of transportation and food in the long run.”
On whether deregulation meant that prices would rise or fall in response to market forces, the agency stated that the cost of petroleum products would be lower whenever there was surplus in supply.
“In a deregulated market, prices should respond to market forces, where prices will be lower when there is a surplus in supply and higher when supply is limited.
“Moreso, competition among the players in the deregulated market will ensure that prices remain reasonable.”
The government agency stated that based on records, Nigeria loses almost N1tn annually subsidising petrol, a product used mainly for consumption rather than production, which had led to no real economic benefits for the country.
It noted that in the wake of the global financial crisis and increasing sovereign debt risk, it had become imperative for the government to look inward to finance its development needs and revitalise the economy.
The PPPRA stated that petroleum subsidy removal, and the subsequent deregulation of the petroleum downstream were among the measures needed to free up funds for developmental work by shaking off some resource draining burdens.