According to the Minister of State for Petroleum, Dr. Ibe Kachikwu, fixing the price of Premium Motor Spirit (PMS) at N145 a litre, has helped the Federal Government save about N139 billion from subsidy removal in the last two months.
Dr. Ibe Kachikwu had said that government was paying about N16.4 billion monthly as subsidy at a regulated price of N86.50.
Kachikwu said that there was no provision for subsidy in 2016 appropriation, therefore the need to remove fuel subsidy.
According to him, the Federal Government spent N1 trillion in subsidizing petrol in 2015 alone. Kachikwu said that the new framework helped solve fuel scarcity crisis by ensuring availability of products at all locations of the country.
In his opinion, the new fuel-pricing regime would also ensure market stability and improve fuel supply situation through private sector participation.
He believed that it would reduce hoarding, smuggling and diversion substantially and stabilize price at the actual product price.
It is also expected to create labour market stability, which will potentially create additional 200,000 jobs through new investments and prevent potential loss of nearly 400,000 jobs in existing investment. The new system is expected to provide government more revenue to address social and infrastructural needs in the country.