By Stephanie Odiase
The Federal Government has announced an end to petrol price fixing, saying it will no longer release pricing templates but allow market forces to dictate the retail cost of petrol in the country.
The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr. Farouk Ahmed, stated this in Abuja on Friday.
Ahmed who explained that market forces are allowed to dictate prices under the liberalised market, however stated that the Authority will make sure quality control is complied.
He informed that the Authority will issue licenses to prospective importers who meet the requirements, and they would be free to import fuel, sell at market driven prices and recover their costs.
“We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give license to a prospective importer. The market is now open for everybody that wants to import as far as they meet all the requirements, so, it is not about the NNPC alone.
“For everybody in the sector, we make sure we guide their operations whether at the depot or wherever the product is, but we will not put a cap to say this is what the price must be. 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.
he however, clarified 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,” Ahmed said.
On whether marketers can source forex from the Central Bank of Nigeria (CBN), Ahmed stated that the CBN will not give forex to importers, saying that they are now free to source their foreign exchange anywhere around the world to import petroleum products and then recover their costs without impediments.
“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,” he said.
The NMDPRA chief also revealed that the federal government has officially scrapped petroleum equalisation as well as the national transport allowance.
While noting that although no template spells out the pricing components of petrol price, he hinted that the market will henceforth be modulated to allow the fluidity of prices.
He informed that the Federal Competition and Consumer Protection Commission (FCCPC) will mount aggressive monitoring of activities in the downstream sector to prevent profiteering by petroleum marketers.
“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,” Ahmed clarified.
On whether prices will be cheaper when Dangote Refinery comes on stream, Ahmed was quick to caution 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. And 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.”
He added further that the Dangote Refinery will help the nation in two ways, by giving Nigeria easy access to petroleum products as it is within the Nigerian territory as well as through increased employment.
Source: e360