Subsidy on petroleum products is not sustainable given the huge funds spent on it and would therefore be stopped, two ministers said yesterday in Abuja.
Petroleum Minister Rilwanu Lukman and Labour Minister Adetokunbo Kayode spoke separately in Abuja, saying the funds used in subsidizing fuel products would better be utilized by government in improving infrastructure.
Lukman said the amount spent on fuel subsidy was “more than the total expenditure total capital budget of the Federal Government.”
He added: “The removal of petroleum subsidy is ultimately inevitable because government is spending so much on subsidy that other government activities have become compromised to the extent that the resources which should have been put into these projects like health, education, road construction is being used on subsidy.

“This situation is untenable, it is unacceptable and we have to deregulate. We have virtually reached that point and the ministry has now finalized the approach. In the next few months we will get ready to effect this for the benefit of our economy and more importantly for the benefit of our teeming population.”
Lukman also said, “When we liberate the market, free the market by deregulation, it will be possible for people to bring in petroleum products freely. When they do so, there will be enough. At the beginning, there may be surge in the price, a little bit more but when the market is freed and products are able to flow freely, the price will tend to moderate and it will most certainly go down.”
He said major stakeholders including federal lawmakers and oil workers unions are gradually being convinced on the need for total deregulation.
The minister said the government is targeting crude oil production totalling 4 million barrels per day by the year 2010, saying the current daily production has reduced from 2.3mbpd to 1.4mbpd because of the Niger Delta crisis.
On his part, the labour minister, Adetokumbo Kayode urged workers to embrace the deregulation plan in order to stem the “huge loss that has followed the granting of subsidy and also stop the hike of price in the sector.”
Kayode said, “The high cost of deregulation is one of the challenges facing the textile industry today and unless government deregulates, the cost of LPFO will continue to go up. More so, deregulation is part of the subsidy issue and the bulk of money, trillions of naira paid on subsidy is going to where nobody knows because it is not rubbing off on you, it is not rubbing off on your factories but it goes to private pockets. So government wants to push that and remove it.”
He praised the National Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) for “understanding the real issues in the deregulation debate and supporting government in its quest to sanitize the sector.”
“Deregulation is the way of the future; we are not saying that government is fully abandoning everything to the forces of demand and supply but in the sense that government will block all loopholes to allow a substantial amount of money to support the stimulus plan that the manufacturing sector needs,” he said.
But Vice President of the Nigeria Labour Congress (NLC) Comrade Issa Aremu faulted the plan, citing a report released by the United Nations Conference for Trade and Development (UNCTAD) calling on less developed countries to stop further liberalization of their economies.