The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said it will no longer fix or release templates for petrol prices.
Speaking in Abuja, the Authority Chief Executive (ACE), Engr Farouk Ahmed, explained that under the liberalised market, market forces are allowed to dictate prices.
Ahmed explained: “As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price. In a deregulated market, it is the market force that dictates the price.”
Ahmed explained that the NNPC’s role is to fix the prices of the petrol it imported and not take over the responsibilities of the Authority.
“In the case of the NNPC, the organisation is the sole importer at this point. We told the NNPC to recover its costs because they know how much it cost them to import the product and sell it. Of course, we also know how much shipping, offshore, ex-depot and ex-pump are. But we cannot tell them to sell at a price because the market is deregulated,” he said.
The NMDPRA chief also revealed that the Federal Government has officially scrapped petroleum equalisation as well as the national transport allowance.
He also stated that the NMDPRA and the Federal Competition and Consumer Protection Commission (FCCPC) will mount aggressive monitoring of activities in the downstream sector to prevent profiteering by petroleum marketers.
Ahmed further informed marketers are now free to source their foreign exchange anywhere around the world to import petroleum products and then recover their costs without impediments.
On where the importers will source their forex from, Farouk said: “No. the CBN will not give dollar to anyone because it is an open market. Anyone willing to import should get the dollars from anywhere to import. Anyone willing to open a letter of credit from any part of the world can do that to import. That marketers can source their forex from anywhere is the beauty of the liberalised market that the NMDPRA has introduced based on the provision of the law.”
Though no template spells out the pricing components of petrol price, Ahmed hinted that the market will henceforth be modulated to allow the fluidity of prices.
He added: “This means that the price will no longer be static. It will depend on the international price of the gasoline market. But this does not imply that marketers can sell at any price. If we find that certain prices are way above the expected profit margin, we and the FCCPC can move in to curb such excesses because that will be profiteering. The market structure will dictate the price swings at every point in time.”
He explained Dangote Refinery will help the nation in two ways, saying “The refinery will give Nigeria easy access to petroleum products on-land for security reasons because it is within the Nigerian territory. Secondly, it will increase employment for our professionals.”
However, Ahmed cautioned against optimism for cheap petroleum products, saying, “I don’t think products will be cheaper because the company will be buying crude oil at the international price.
“However, it is going to be cheaper in terms of freight rate. Bringing of cargoes from Europe. Dangote Refinery is a game changer in terms of accessibility.
“By the time the NNPC refineries and other modular refineries across the country come on stream, Nigeria will be a net exporter of petroleum products.”
