The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) says it will no longer set prices or issue templates for Premium Motor Spirit (PMS).
The Authority’s Chief Executive (ACE), Mr. Farooq Ahmed, who said this at a news conference in Abuja on Friday, said market forces will now determine prices under a free market.
“As far as the NMDPRA is concerned, this is not the same as it used to be when the PPPRA sets the price; in an unregulated market, it is the market force that dictates the price.
Let us remember that the development was a sequel to the elimination of the subsidy to the PMS known as gasoline.
President Bola Tinubu in his inaugural address on Monday said the fuel subsidy regime ended with the commencement of his administration.
However, Ahmed said the market is now open to anyone who will import to meet all requirements.
“So it’s not just about the Nigerian National Petroleum Company Limited (NNPC Ltd).
“We put regulations in place, make sure quality control is complied with, make sure the product is there and give a license to the potential importer.
“We make sure we lead the performance of everyone in the industry whether it’s in the warehouse or wherever the product is but we won’t limit ourselves to saying this is what the price should be,” he said.
According to Ahmed, the role of NNPC is to fix the prices of imported petrol and not to undertake the authority.
“As far as NNPC is concerned, the organization is currently the sole importer.
We asked the NNPC to recover their costs because they know how much it costs them to import and sell the product.
“Of course we also know how much shipping, offshore, warehouse delivery and pump delivery cost.
But since the market is free, we can’t call them sell at a price,” he said.
The head of the NMDPRA also revealed that the federal government has formally scrapped petroleum equalization, including the nation’s transportation allowance.
He said the NMDPRA, the federal government and the Consumer Protection Commission (FCCPC) would aggressively monitor activities in the downstream sector to deter greed by petroleum marketers.
Ahmad further revealed that marketers are now free to procure foreign currency anywhere in the world to import petroleum products and recover the cost without hindrance.
On where importers will get their hard currency from, Ahmed said that CBN would not give dollars to anyone because of the open market, adding that anyone willing to import must get the dollars from anywhere to import.
According to him, anyone wishing to open a letter of credit from any part of the world can do so to import.
“The fact that marketers can source currency from anywhere is the beauty of the liberalized market that the NMDPRA has introduced based on the provisions of the law.”
Ahmed said that the market would then be adjusted to allow for price flexibility, adding that although there is no framework outlining the pricing components of petrol prices.
He said: “On this basis, the price would no longer be static, but the international price of the gasoline market.”
“That doesn’t mean marketers can sell at any price.”
According to him, the NMDPRA and FCCPC will collaborate to curb excesses if certain prices were way above the expected profit margin.
“The structure of the market determines the volatility of prices over time,” he said.
Ahmad cautioned against optimism about cheap petroleum products, saying the products may not be cheap as the company will buy crude oil at international prices.
“The Dangote Refinery is a game changer in terms of accessibility.
“Until the NNPC refineries and other modular refineries come online across the country, Nigeria will be a net exporter of petroleum products,” he said.
