Forex scarcity, not subsidy removal caused fuel price hike – Osinbajo

Vice-President Yemi Osi­nbajo has reacted to the controversy over the re­cent hike in pump price of petrol, blaming it on foreign exchange challenges and not removal of government subsidy on the vital commodity.

He chaired the meet­ing at the Presidential Villa on Wednesday with labour lead­ers and oil sector operators after which government said they had all agreed to the price increase.

Following the furore that en­sued, Osinbajo yesterday signed and issued a statement titled the fuel pricing debate: our story in which he said "the real issue is not about removal of subsidy. At $40 a barrel, there isn't much of a subsidy to remove".

After explaining the difficul­ty oil importers faced in sourcing foreign exchange from outside sources to fund their operations, the Vice-President declared that the price hike is therefore "not a subsidy removal issue but a for­eign exchange problem, in the face of dwindling earnings".

Although President Mu­hammadu Buhari had been reported in the past to have declared his opposition to gov­ernment paying subsidy on pe­troleum products, Osinbajo said in the statement that "the Presi­dent is probably one of the most convinced pro-subsidy advo­cates."

He said that fuel shortages had also been caused by the ina­bility of the Nigeria National Pe­troleum Corporation (NNPC) to import 100 percent of domestic petrol requirements, but project­ed that by the end of 2018, the nation's refineries will be supply­ing 70 percent of the local pet­rol needs.