Covid 19 Pandemic responsible for recent increases in pump price and electricity tariff – Osinbajo

The reasons for the recent increases in petrol pump price and electricity tariffs in the country have been revealed by the Federal Government.

The Vice President, Yemi Osinbajo who represented President Mohammed Buhari, at the recent ministerial performance review retreat, blamed the COVID-19 pandemic as reason for the increase in petrol pump price and electricity tariffs. 

He said, “The COVID-19 pandemic 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 lower prices at that time was passed to consumers”.  

“This was welcome by all and sundry. The effect of deregulation though is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally will also go up”.

“There are several negative consequences if government should even attempt to go back to the business of fixing or subsidising PMS prices. First of all, it would mean a return to the costly subsidy regime. Today we have  60 per cent less revenues, we just  cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration”. 

“We do not have the resources at this point to continue in this way and it will be grossly irresponsible to borrrow to subsidise a generation and distribution which are both privatised. But we also have a duty to ensure that the large majority of those who cannot afford to pay cost reflective tariffs are protected from increases. NERC, the industry regulator, therefore approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.”