Ahead of the planned full deregulation of the downstream sector of the oil industry, the Nigerian government has proposed a â?Palliative Packageâ? of about 100 billion naira (about US$700million) for the revitalisati on of key infrastructure in the transport, railways and power sectors of the eco n omy, the private Thisday newspaper said Monday.
Quoting a highly-placed government official, the paper said the package was to m itigate the impact of the expected higher prices in the short term when eventual l y the full deregulation of the pricing system for petroleum products is implemen t ed.
The proposal, which will be captured in the 2010 budget of the federal governme nt, is subject to the approval of both the Senate and House of Representatives.
The official was not forthcoming with more details, but merely said the governme nt had always been willing to mitigate the impact of its policies, and would not
shy away from its responsibilities.
On the proposal to reform the downstream sector, the official assured Nigerians that the underlying intention of the removal of subsidies was not to save money b ut to ensure that the public got the better deal of having the money channelled i nto the key sectors of the economy to enhance overall prosperity and growth.
He blamed the inefficiencies affecting the downstream petroleum sector on â?bud getary pressure from unsustainable subsidy payments, lack of investment in refin e ries as well as uncompetitive market structureâ?.
The official recalled that out of the 18 licences granted in 2002 by the Federal Government to prospective investors to build and operate refineries, no single r efinery had taken off â?because of the uncompetitive operating environment in th e downstream petroleum sub-sectorâ?.
Meanwhile, the government at the weekend said it would pay 40 billion naira (abo ut US$290 million) to oil importers and marketers as petroleum subsidy within th e next two weeks, being a part of 70 billion naira (about US$490 million) outstan d ing amount claimed to have been owed them.
The amount is expected to be paid from the proceeds of excess crude account domi ciled with the Central Bank of Nigeria (CBN).