Deregulation: Govt to subsume PEF, PPPRA – Petroleum minister

By Tunde Opalana, Abuja

With last week deregulation of the oil sector, Federal Government may have to forgo full operations of both the Petroleum Equalisation Fund (PEF) and Petroleum procducts Pricing Regulatory Agency (PPPRA), two major parastatals in the sector.

READ ALSO: Petrol price to be set by oil marketers, says PPPRA

Minister of State for Petroleum, Chief Timipre Sylva made this known in an interview with journalists in Abuja on Thursday.

Oblivious of the fact that oil subsidy is not sustainable and that Nigerian refineries cannot operate under a regulated regime, the minister doubted the continuous existence of both PEF and PPPRA.

Sylva said after the commencement of the Petroleum Industry Bill (PIB) both agencies will no longer exist.

“They will be subsumed. They will reincarnate in a different form but not exactly in this form but of course. I do not want to preempt the passage of the PIB. It is for the National Assembly now. So, there is going to be a role for them. They are not going to be obliterated. But they will be subsumed.

Explaining the epilectic functionality of existing refineries, the minister said no refinery can operate with subsidy.

He said “before now, you would asked, why has the refining sector not developed? It is because no refinery can operate commercially in Nigeria with subsidy. If you have a refinery and you refine your product and you are expected to sell it at a subsidised rate, how is the refinery going to make profit and survive? So, nobody wanted to invest in refineries.

“And that is one of the reasons why our refineries became unsustainable as well because they were refining and selling at a loss. So, every time they came back to government to ask for money. Anytime any part got bad they had to come back because they were not operating commercially.

He justified federal government’s removal of oil subsidy by saying that subsidy is unsustainable, Daily Times gathered.

Sylva said ” let us look at it: Subsidy means that you buy the product at a certain price and then you reduce the price and sell it at a loss to the people. It is something that is good to do. It is something that our president would like to do so much because of his love for the common man. But is it something that can be sustained in perpetuity?”