Nigeria To Return To Fuel Price Liberalization
…PPPRA parleys CBN on proposal
Nigeria may return to the erstwhile regime of private businesses sourcing for petroleum products from anywhere, and having the products run under market driven-forces.
Orient Energy Review (OER) investigations reveal that officials of the Petroleum Products Pricing Regulatory Agency (PPPRA), are currently engaging their Central Bank of Nigeria (CBN) in discussions with hope of reopening the window of products importation to private businesses.
Private import-regime for petroleum products ruled until a couple of years ago when the Muhammadu Buhari administration domiciled petroleum products importation with the Nigerian National Petroleum Corporation (NNPC). The federal government also retained retail pricing regulation which entailed fixing uniform pump price across all locations in the country.
The pricing regime had shut out private businesses as profit margins are wiped out by in-built subsidy in the pump price. But with the recent complete removal of oil subsidy, analysts said the federal government is disposed to letting market forces rule in all sectors of the industry.
The PPPRA executive secretary, Mr Abdulkadir Saidu, confirmed the engagements with the CBN officials, stressing however that the move is aimed at determining the applicable Foreign Exchange (forex) rates for the importation of petroleum products and modality for accessing the forex window by the oil marketing companies.
“This rate is reflected on the pricing template to determine the expected open market price of the product. This means that going forward, the guiding price to be advised, will be determined based on the rates quoted by CBN. The price is expected to guide the sale of PMS in Nigeria. In fact, we plan to extend the same pricing mechanism to Aviation Turbine Kerosene (ATK), Automotive Gasoline Oil (AGO), among others. The whole essence of the price band is to ensure price efficiency that is beneficial to both the consumers and oil marketers,” Saidu said in a statement he issued recently in Abuja.
The PPPRA boss pointed that Nigeria’s four refineries were expected to play key roles in the current fuel pricing regime, stressing that the policy would also create immense opportunity for increased private sector participation in the oil and gas industry in Nigeria.
“The Nation’s refineries are required to key into the new pricing regime just like all other operators both private and public. The new regime will open up the Oil and Gas Sector for more private players and investments in refineries, storage facilities and transportation.
“At the end of the day we expect to see more private players operating in the industry. The liberalization of the entire industry will make it possible for private investors to recoup their investments, leading to a more vibrant downstream sector,” he said.