Nigeria begins review of petroleum products pricing models

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is reviewing all the pricing models for petroleum products sold in the country as part of moves to confront the challenge energy transition presents.

Farouk Ahmed, Authority Chief Executive, NMDPRA in a speech at the 2022 edition of OTL Africa Week themed: “Regulating downstream energy transition in dynamic times”, at the Oriental Hotel, Lagos, said the regulator is accelerating the full implementation of key provisions of PIA 2021.

To this end, the country is removing subsidies on petrol by the end of May 2022 and ensuring a full liberalisation of the downstream petroleum sector. It will also ensure that imported petroleum products meet standard specifications.

The Authority is addressing the issue of fuel quality through strategic collaboration with key stakeholders in the petroleum products value chain such as the Netherland Human Environment and Transport Inspectorate (ILT), the NNPC Limited, the Standards Organisation of Nigeria (SON), and the Nigeria Customs Service (NCS).

“Of particular importance is our strategic engagements with our Netherlands and Belgian Counterparts, considering that bulk of Nigeria’s petroleum products importation originates from the ARA region,” he said.

Ahmed also said that in accordance with Nigeria’s aspirations for the decade of gas, NMDPRA is supporting the accelerated development of all key initiatives and projects that will guarantee an optimal supply of gas from the abundant natural gas resource of Nigeria.

“Working with key stakeholders to unlock the huge demand opportunities for use of gas in transforming the economic fortunes of the country.”

Farouk added that the Authority will leverage on the provisions of the PIA that would spur gas development.

“This would include concessionary royalties on domestic gas supply, concessionary tax regime for domestic gas infrastructure and co-financing of strategic gas investments,” he said.

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“Developing an investor-friendly economic model for the domestic gas market,” he said.

According to Farouk, NMDPRA will promote the use of LPG as a cleaner cooking fuel alternative to biomass.

In addition, NMDPRA will be at the forefront of supporting programs that prioritise LPG adoption for cleaner cooking fuels and technologies to support Nigeria’s objectives of achieving universal access to affordable, sustainable, and modern energy by 2030 in line with UN Sustainable Development Goal No. 7 (UN SGD-7).

According to Farouk, recent research has demonstrated that the transition to LPG for clean cooking reduces air pollutants and overall global temperature reduction by the year 2040.

Furthermore, we are fully aligned with our upstream sector counterpart (NUPRC) in delivering optimal regulatory service and driving the use of gas through the Nigerian Gas Flare Commercialization Program

In accelerating the full implementation of key provisions of PIA 2021, the NMDPRA: emplaced a functional governance system for the regulatory administration of the midstream and downstream sector

The regulator will also develop 12 new regulations for the midstream and downstream and finalise the process of their issuance / gazetting. Other relevant regulations are also at different stages of development