The Nigerian government said on Thursday that it has officially deregulated the petrol price and removed the cap on the product.
Approved by President Muhammadu Buhari, the Petroleum Product Pricing Regulatory Agency (PPPRA) announced that the deregulation has been backed by the law and thus, issued new regulations titled: Premium Motor Spirit Market Based Pricing Regime Regulation, 2020.
“The price cap per lire in respect to Premium Motor Spirit (PMS) is removed from the commencement of these regulations,” said in a template seen by BusinessDay.
Exercising its powers conferred on Section 7 and 24 of the Petroleum Product Pricing Regulatory Agency (Establishment) Act. No. 8 of 2003 PPRA said from the commencement of the regulations, a market-based pricing regime for PMS (petrol) shall take effect.
Meanwhile, the Nigerian government has said that it has deregulated the petroleum downstream sector since March, to allow the removal of the cap on the petrol price but two months after, PPPRA was still determining the price.
But oil marketers had asked the FG to allow the requisite legislation to back the policy, for the downstream oil & gas industry to truly be deregulated.
Responding to the new regulations by PPPRA, Ayodeji Ebo, Manging Director, Afrinvest Securities Limited said the move by the agency is what it means not to waste a crisis.
“Great news for the oil & gas sector as well as a lot of savings for the FGN and the states. No more under-recovery. Next should be the power sector (cost-reflective tariff) and then FX (convergence of d rates),” Ebo said.
Nigeria’s Federal Government bowed to long-standing pressure to restructure the oil sector and remove subsidy after the country was hit by lower oil prices which have put pressure on its reserves.
The Muhammadu Buhari’s led administration removed the petrol price peg of N145/litre to N125 in March 2020. The first time the price would be adjusted since it was reviewed in 2016, from N86 per litre to N145 by President Buhari on assumption of office.
A breakdown of the new regulation by PPPRA revealed that the agency will still be monitoring the market trend and will be giving advice on the monthly based price for PMS.
“The agency shall monitor market trends and advise the NNPC and oil marketing companies on the monthly guiding the based price,” said adding that the “price of PMS advised by the agency shall be the guiding retail price at which the product shall be sold across the country.”
Responding to the new regulation, a market player questioned the deregulation of the petrol price as he said on the condition of anonymity that “How is this “new policy” It reads clearly that PPPRA would still be fixing d price.”
Tolu Ogunlesi, Special Assistant to the President on Digital & New Media clarified the ‘guidance’ by PPPRA and said on a tweet on Friday that “here’s the exact wording from the PPPRA: The agency shall monitor market trends and advise the NNPC and oil marketing companies on the monthly guiding market-based price.”
