- Govt to deregulate sector
- Fuel to sell above N100/litre
Plans are afoot by the federal government to completely deregulate the downstream sector of the petroleum industry. Expected to come to effect next week, unless otherwise shelved, the move will mean government abandoning its policy of fixing the pump price of petrol this week in order to allow independent marketers resume the importation of fuel and sell at profitable margins, authoritative sources at Ministry of Petroleum Resources said yesterday.
Minister of State for Petroleum Resources Dr. Kachikwu at a meeting with PPPRA officials in Abuja last month disclosed that the price of fuel would go up this month.
Complete downstream sector deregulation involves opening up the downstream petroleum industry for participation by all players, particularly the private sector, is widely considered the panacea for the incessant fuel supply crisis in the country.
With full deregulation, there will be fair competition, with the burden of petroleum products supply and distribution shared between private investors and government, with both having equal access to all aspects of industry operations, ranging from refining, sourcing, to marketing and distribution.
While government will continue to monitor and enforce compliance with established standards, products pricing will be determined by the prevailing market forces in an atmosphere of competition
The move, according to sources, is expected to ease the unending shortage of petrol products across the country. The Nigerian National Petroleum Corporation (NNPC) has been the sole importer of petrol for months because independent marketers have been unable to purchase dollar at the discounted official rate due to the scarcity of the green back, courtesy of the fall in the nation’s foreign reserve.
The matter is made worse by the fact that the nation’s four refineries can hardly refine enough for local consumption.
The deregulation would likely lead to about 27.17 per cent hike in fuel price nationwide which may jack up the pump price of petrol to above N100 per litre from the current price of N86 per litre at NNPC-owned filling stations and higher at other independent outlet.
Those in the know said government was on the verge of discreetly giving permission to petroleum products marketers to gradually adjust their pump prices as early as next week to signal the formal take-off of deregulation in the country.
It was gathered government resorted to this measure to end the vicious cycle of fuel scarcity crises and avoid subsidy payments. However, unlike the situation in 2012 when the increase led to mass protest by labour unions and civil society groups, this time, sources said government have successfully convinced the parties on the merits of the planned action.
But another source told Nigerian Pilot that petrol stations operated by the NNPC will continue to sell petrol at the current price of around N86 as government intends to continue to adjust prices at its stations under the modulation template it recently introduced, the sources further said.
Before January this year when the price of crude oil at the international market dropped to less than $28 per barrel, government was paying subsidy in multiples of billions of Naira annually throughout the period of high oil prices.
With the introduction of price modulating mechanism by government in January, Nigerians experienced for the first time a situation where marketers had to refund to the PPPRA costs recovered for importing fuel at a landing price lower than government approved price band of N85.50 per litre for NNPC mega stations and N86 for other stations. A review of the latest PPPRA fuel pricing template for April 28 showed that retail price for petrol stood at N99.38, showing a fresh subsidy level of between N12.08 and N13.08 per litre.
NNPC, PPPRA deny price increase of PMS
When contacted on the issue, Group General Manager, Group Public Affairs Division of the NNPC , Garbadeen Mohammed, said reports of the planned introduction of deregulation by government was new to him. In the same vein, Assistant General Manager, Operations, PPPRA Victor Shidok denied any knowledge of the plan to increase the pumping price of PMS.