This move has been touted by many to signal the full deregulation of the downstream petroleum industry as has been clamoured over time by most industry operators. Apparently giving the seal to it, the Group Managing Director of NNPC Mr. Mele Kyari deflected concerns about the need for a legal framework by asserting that the PIB is not necessary to go ahead with deregulation. He further said that deregulation is a policy matter as the subject of petroleum products prices is not in any law (see Mr. Kyari’s interview with Premium Times published on June 1 2020 https://www.
First, Mr. Kyari is wrong when he asserts that petroleum products pricing is not in any law. Section 6 of the Petroleum Act gives the Minister of Petroleum power, by regulations published in a Federal Gazette, to fix prices at which petroleum products may be sold in Nigeria. It would seem that is exactly what the President, who is the Minister of Petroleum, has asserted in the MBPRP Regulations by stating that “the price of Premium Motor Spirit (PMS) advised by the Agency shall be the guiding retail price at which the product shall be sold across the country.”
There is also an existing law known as the Price Control Act which provides for control of prices of certain goods including petroleum products. Section 5 of that Act, gives the government power to fix the price of any controlled commodity (which includes petroleum products), while section 6 makes it a criminal offence to sell above the fixed price.
It doesn’t end there. If you go back to the Petroleum Act, section 9 gives the Minister the power to determine the amount of crude oil that may be supplied to a refinery and the price at which the refinery may sell its refined products (Dangote beware!).
Even the PPPRA Act gives the Agency the power in section 7 to “periodically approve benchmark prices for all petroleum products”.
So, at least three existing laws have clear-cut provisions empowering government to cap petroleum products prices. The implication is that President Buhari may wake up anytime, and in a pang of pro-people socialist sentiment, decide that petroleum products may not be sold above any price he deems fit. The regulation can be changed and gazetted in a day. If an oil marketing company has borrowed funds with a higher sale price as benchmark, it will be on its own. The law will protect the President, and the operator will be left to his fate.
That is why the PIB is still relevant to the extent it proposes to replace or amend the Petroleum Act. If the government is not ready for it, at least the relevant provisions in the Petroleum Act, Price Control Act and PPPRA Act could be amended and sent to the National Assembly as an Executive Bill for enactment. It will pass quickly, as this National Assembly has shown it does not refuse Presidential requests.
Emeka Akabogu
