…As Chairman says Major oil marketers lost N10bn to fuel price reduction***
The Petroleum Products Pricing Regulatory Agency (PPPRA) has removed the cap on the price of Premium Motor Spirit (PMS) also known as petrol, even as Major Marketers’ Chairman lament loss of over N10 billion, due to petrol pump price reduction.
The agency made the disclosure in a document it released in Abuja on Thursday entitled, ‘’Market Based Pricing Regime for Premium Motor Spirit (PMS) Regulations, 2020’’.
It said in the document signed by its Executive Secretary, Mr Abdulkadir Saidu, that, henceforth, the price of PMS would be determined by market forces.
It said that it would continue to monitor trends in the crude oil market and advise the Nigerian National Petroleum Corporation and oil marketers on monthly guiding price for the commodity.
The agency said that it made the regulations with the approval of President Muhammadu Buhari.
“From the commencement of these regulations, a market-based pricing regime for Premium Motor Spirit (PMS) shall take effect.
“The agency shall monitor market trends and advise the NNPC and oil marketing companies on the monthly guiding Market-Based Price.
“The price of Premium Motor Spirit (PMS) advised by the agency shall be guiding retail price at which the product shall be sold across the country.
“The regulations may be cited as the Premium Motor Spirit (PMS) Market Based Pricing Regime Regulations, 2020, made this 20th day of March, 2020,” it said.
According to the agency, the regulations seek to complement and enforce the provisions of the PPPRA (Establishment) Act, 2003, and to notify the general public of the existence of a market-based pricing regime for PMS with effect from March 2020.
In a related development, the Major Oil Marketers Association of Nigeria (MOMAN), on Thursday said marketers lost over N10 billion due to reduction of petrol pump price from N145 per litre to N121 by government.
The Chairman of MOMAN, Mr Adetunji Oyebanji, made the disclosure during a webinar on “Downstream Petroleum Market Deregulation: Prospective Impact on Nigeria Economy Post COVID-19.”
The webinar was organised by Financial Energy Review in collaboration with Leadgrid Series.
Oyebanji, who is also the Managing Director of 11Plc, said the petroleum downstream sector was hard hit by the twin challenges of COVID-19 and crash in global crude oil prices.
He said the sector thrived on movement of persons and goods which were severely curtailed due to the lockdown measures put in place by the Federal and State Governments to contain the spread of coronavirus.
The chairman called for the full deregulation of the petroleum downstream sector, adding that what government recently did was only to remove subsidy on Premium Motoring Spirit (PMS) also called petrol.
Oyebanji said: “Why we talk about complete deregulation being a better option is because we need investments in our pipelines distribution network which are very old.
“We need our refineries to be put in place and Dangote Refinery is coming up but we need more refineries so that we can reduce the pressure on our foreign exchange reserve.
“Players in the market need to know when to stock and when not to stock products because we may have lost up to N10 billion when those prices were reduced recently.
That doesn’t encourage investors,” the MOMAN chairman said.
He noted that the billions of naira being spent on fuel subsidy by government could be deployed to other critical areas which would help transform Nigeria’s economy.
He named the critical areas to include health care, education and infrastructure development.
The MOMAN chairman said: “While we welcome the removal of subsidy on fuel, we need clarity on government’s claim that the market has been deregulated.
“Many of the institutions supporting the former regime such as the Petroleum Equalisation Fund, Petroleum Subsidy Fund and the Petroleum Products Pricing Regulatory Agency are still operational.
“So there is a bit of confusion whether we have fully deregulated the sector or whether government just decided that they won’t pay subsidy anymore,” he said.
Oyebanji said there should be proper legislative framework to guide the deregulation of the downstream sector and protect the interest of the country and private investors.
He added that for the sector to achieve its potentials, government must switch to a monitoring role instead of being a key player and regulator at the same time.