The Federal Government has explained that the recent increase in fuel price was in consonance with the hike in international crude oil price.
The Minister of State for Petroleum, Timipre Sylva gave the explanation on Monday after meeting with President Muhammadu Buhari at the State House, Abuja.
Sylva held that petrol price would always increase whenever oil rate had gone up.
In his words, “Petrol is refined from crude oil, so petrol price is directly related to the price of crude oil in the market.
“So, if I buy crude oil at a certain price and refine this month, if the crude price is low at the time, then my petrol price will become low because the feedstock from which I refined petrol was lower in price.
“If the price of crude oil goes up, then it means the price of the feedstock has gone higher, it will also affect the price of the refined product and that is why you see that product prices are usually not static, it depends on the price of crude oil, which goes up and down.”
Sylva added, “If you have been following crude oil prices, you would have seen that crude oil prices went up a little bit, as a result of this (vaccine) announcement.
“So, when crude oil prices go up a little bit, then you will see that it instantly reflects on the price of petrol, which is a derivative of crude oil. That’s why you see that there’s this movement and if we listen to ourselves, this is the same explanation we’ve been giving.”
The minister clarified that due to the deregulation of the petroleum downstream sector, the government is not longer involved in fixing fuel price.
He further said, “Just take the example of our production levels; our crude oil production level was over two million barrels a day. Today, to comply with OPEC cut and quota, we have reduced production to 1.4 million barrels.
“Having reduced production to 1.4 million barrels, crude oil is also not selling at an optimal rate. Where do you get the money to continue to subsidise?
“It is very clear that today; things are not as they were before. The earnings of government has reduced by 60 percent and what is happening in the oil sector reflect what is happening elsewhere.
“I believe that at this point, we are still trying to cross the first buck. We will get there; we will get used to it as Nigerians.”