The Petroleum Products Pricing Regulatory Agency (PPPRA) Monday said that henceforth the pump price of petrol will continue to rise or fall with the international price of crude oil.
The Executive Secretary of the agency, Abdulkadir Saidu, in a note he said was meant to clarify some questions surrounding the recent fall in the price of the product in filling stations, said anytime the price of crude oil rises in the international market, Nigerians will also pay more for petrol.
He added that going forward, the pricing of petrol will reflect market fundamentals, but said that PPPRA will continue to monitor price trends and advise monthly guiding price for all petroleum products, based on prevailing market realities and other pricing fundamentals.
Saidu emphasised that the plunge in global crude prices made it increasingly difficult for government to finance the 2020 national budget as it was predicated on a crude price of $57 per barrel.
He noted that the low crude oil prices presented the opportunity to address the lingering challenges associated with the under/over-recovery regime and free up vital funds required to develop in other key sectors of the economy.
According to the PPPRA, the new initiative is expected to stimulate private investment and growth in the downstream sector and encourage the resumption of products importation by oil marketing companies, translating to more job creation as many depots and facilities that were dormant would now become active.
Saidu added: “What we have in place is a market reflective pricing system. Petroleum products prices will be adjusted in line with market realities and the result is what we see presently with prices on the downward slide.
“Accordingly, price will naturally be adjusted to reflect a true picture of market fundamentals at any particular period (high or low). Also, efforts are being put in place to develop alternative fuels to PMS by deepening the utilisation of LPG/CNG as auto gas in Nigeria.
“This will come into fruition in the medium term and will help to cushion the effect in case of situation of high oil price.”
He maintained that the liberalised pricing regime will ensure a competitive and more efficient market that guarantees reasonable returns to operators and ensure consumers pay appropriate prices in line with market reality and ensure they are not over-charged.
Saidu said that 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 liberalisation of the entire industry will make it possible for private investors to recoup their investments, leading to a more vibrant downstream sector,” he said.
However, he noted that in order for the nation’s refineries to continue producing fuel, the authorities in charge of the refineries would need to fix the refineries and ensure they come back on stream at optimal level.
Saidu expressed hope that the upcoming Dangote refinery and other modular refinery projects nationwide will be able to key into the new pricing regime.
The PPPRA boss said the agency was engaging with the Central Bank of Nigeria (CBN) to determine the applicable foreign exchange rates for the importation of petroleum products and modality for accessing the applicable foreign exchange window by the marketers.
“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 ATK, AGO, etc. The whole essence of the price band is to ensure price efficiency that is beneficial to both the consumers and oil marketers,” he said.