Nigeria’s Federal Government on Tuesday said it would henceforth no longer release guiding price bands for Premium Motor Spirit (PMS), popularly called petrol.
This means that going forward, PMS price would be determined by the forces of demand and supply and the international cost of crude oil, Abdulkadir Saidu, executive secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), told journalists in Abuja.
Saidu, who was represented by Victor Shidok, PPPRA’s general manager, administration and human resources, noted that the role of the agency would be to ensure that oil marketers do not profiteer, as every petrol dealer was henceforth free to source for product and fix their price.
“This, however, must be in accordance with our code of conduct because as a regulator, it is our duty to protect the consumer and operators must abide by our codes,” Saidu said.
Confirming this to BusinessDay Tuesday evening, Shidok said that the PPPPA no longer has template for products but that every marketer is free to source products anywhere and bring it to sell in the country.
He, however, said the agency would act as ombudsman to check any marketer that tries to fix outrageous price, adding that the price at which the marketer sells his or her product would depend on their bargaining abilities.
With this move, the government has shown it is on course to fully deregulate the downstream sector of the oil industry.
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 foreign reserves.
Fuel subsidy gulped N10.413 trillion in the last 14 years, from 2006 to 2019, Lai Mohammed, Nigeria’s minister of information and culture, said on Monday.
President Muhammadu Buhari had on Monday, while speaking at the First Year Ministerial Performance Review Retreat in Abuja, listed several negative consequences that would arise if government should even attempt to go back to the business of fixing or subsidising PMS prices.
“First of all, it would mean a return to the costly subsidy regime. Today we have 60 percent less revenues, we just cannot afford the cost. The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration,” said Buhari, who was represented at the retreat by Vice President Yemi Osinbajo.
Buhari had also signalled a possible further raise in the fuel pump price especially as government consolidates its ongoing oil sector deregulation and crude prices pick up.
“The effect of deregulation, though, is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally would go up,” he said.
