Minister of Finance, Budget and National Planning, Zainab Ahmed has said an increase in the pump price of petrol is inevitable in the country as the federal government cannot afford to pay fuel subsidy again.
Zainab who spoke recently during her contribution in an interaction arranged by the Presidency Media team and State House reporters, said petrol price in Nigeria will go higher from its present N165 if the price of crude keeps going up.
According to her, the Federal Government would allow the prices of petroleum products to be determined by the market forces in line with the deregulation of the oil sector.
“We simply cannot afford the subsidy, we don’t have the money to pay for subsidy”, she said.
But simultaneously, it must deal with the “tussle” with Labour over subsidies and rising local prices of fuel.
According to her, the rising oil price is a double-edged sword for Nigeria. While it boosts revenue, it creates fuel price headaches at the same time.
Oil prices are averaging around $64 per barrel, above the $40 per barrel projected in the N13.6 trillion ($35.74 billion) budget document.
Early in March, the Petroleum Products Pricing Regulatory Agency (PPPRA) created national uproar, when it released the price template for petrol for the month.
The template indicated that the retail price should go to N212 per litre, from N162-N165.
Government halted the increase, as it apparently shouldered the subsidy burden, calculated at over N103 billion for the month.
For how long will the government be able to put the lid on price increase as crude prices go up and exchange rate worsens?