afrol News, 27 February - Nigeria Federal government has decided to cut subsidy on petroleum products as it plans to privatise country's four oil refineries to save the plummeting crude prices.

The Minister of Finance, Dr Mansur Muhtar said the 2009 budget has excluded petroleum subsidy which he said it has become too costly for the government considering the current global economic crisis.

Mr Muhtar, said the Federal Government spent N1.6 trillion (US$6,8 billion) the last three years on petroleum subsidies, saying only last year alone, about N640bn (US$4,354 billion) was reportedly spent on subsidies.

He said that Nigerian government could no longer sustain the subsidies in view of the decline in its revenue and huge infrastructure gap, also emphasising that petroleum subsidies did not benefit the average Nigerians.

“The government found out that the subsidies encouraged inefficiency and corruption in the petroleum industry,” he also said.

Nigeria, Africa’s largest oil producer, which earns 90 percent of its export earnings from crude has been forced to review its spending plans to deal with the effects of the global economic crunch and plummeting crude prices.

Mr Muhtar said the government would undertake a comprehensive review of the activities of the Petroleum Products Pricing and Regulatory Agency (PPPRA) to ensure effective and efficient regulation of the downstream sector of the petroleum industry.

He revealed that President Umaru Yar'Adua had fully endorsed the comprehensive review of the price template, the strengthening of the PPPRA, open general licensing, offshore refining, boosting strategic reserve, competition bill and the privatisation of the refineries.

He also assured that the government will not commence the implementation of the recommendations until the economic reform committee has dialogued with all the stakeholders, including labour.

“On petroleum sector, as you know, there have been over the years discussions in relation to the supply, distribution and pricing of petroleum products. In this context, basically in the recent past, there has been concern about the huge amount of money being spent by government by subsidising inefficiencies in the fuel supply and distribution,” he said.

Nigeria, has its oil cut down by almost cut by a fifth as insurgency took its toll in the oil rich Niger Delta with rebels groups claiming to be fighting for their fair share of the oil proceeds from government.

By staff writer

© afrol News

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