By Udeme Akpan
STAKEHOLDERS, Sunday, disagreed with the Petroleum Products Pricing Regulatory Agency (PPPRA), over the introduction of ‘guiding retail price’, to be issued by the agency monthly on Premium Motor Spirit (PMS), despite the deregulation of the downstream sector of Nigeria’s petroleum industry.
In its statement released in Abuja, PPPRA had stated: “Suffice to say that in a deregulated market, the role of a regulator in monitoring and regulating activities in the sector cannot be over-emphasised.
“It would be recalled that the removal of Premium Motor Spirit (PMS) price cap and implementation of a market-based pricing regime were first announced by the Honourable Minister of State for Petroleum Resources, Chief Timipre Sylva, in March 2020. This was followed by PPPRA’s publication announcing the regulation on the market-based pricing regime, thus, creating a legal framework for the policy.
“The Honourable Minister had earlier stated that the Federal Government will continue to monitor the price of petroleum products and advise on monthly guiding prices that guarantee reasonable returns to operators while ensuring consumers pay appropriate prices in line with market reality and are not overcharged.
“The Honourable Minister, in his statement, further stressed that the government’s role in a deregulated economy was to provide, through the operation of the PPPRA, a pricing mechanism to create a market-driven price regime.
“For the avoidance of doubt, it is instructive to state that no private individual or group has the mandate to fix prices of petroleum products, however the statutory regulatory body is saddled with the responsibility of advising guiding prices.
“The Agency shall monitor market trends and advise the NNPC and oil marketing companies on the monthly guiding Market-Based Price. The price of Premium Motor Spirit (PMS) advised by the Agency shall be guiding retail price at which the product shall be sold across the country.”
However, in an email response to Vanguard, yesterday, Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Mike Osatuyi, stated: “The Federal Government through PPPRA announced the removal of price cap on PMS (petrol) on May 4, 2020 thereby ushering in full deregulation of the downstream sector since AGO and DPK has been deregulated earlier.
“The snag of PPPRA bringing what they called pricing guide on PMS template brought a big question of genuine deregulation of PMS, if the claimed market fundamentals will determine the PMS pump price.
“We have not seen PPPRA coming out with pricing guide on DPK and AGO for years. So why now and what is the meaning of pricing guide in a deregulated regime? IPMAN will import when the coast is clear with all grey areas are cleared.”
Similarly, Prof. Omowumi O. Iledare, the Ghana National Petroleum Corporation (GNPC) Professorial Chair, Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, said: “Great stride, but another Executive Secretary can come tomorrow with another president and use a section of the Act to issue another order. Let us not celebrate illegality.
“The act only empowers the Executive Secretary (ES), to advise the minister of petroleum on petroleum product pricing. I am surprised the ES is making such pronouncement. I will be shocked if marketers and banks will take an investment risk on pronouncements by an ES.
“I stand to be corrected, PPPRA cannot deregulate and exist, can it? What then is the role of Petroleum Equalisation Fund (PEF) if marketers can sell products at market price, dictated mostly by crude oil price, exchange rate and margins? Only the president and National Assembly can deregulate to pass the test of time. The window of opportunity to do it is closing very fast.”
Furthermore, the President, Oil and Gas Service Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, said: “The government should deregulate with caution not to leave the masses in the hands of marketers, whose main desires may be to exploit them.”
In addition, speaking at a recent webinar, chairman, Major Oil Marketers Association of Nigeria (MOMAN), Mr. Adetunji Oyebanji, had said: “As far as we are concerned, there is a need for the private sector to make input, while such policy is being put in place so that at the end of the day, we would have a policy that is beneficial not only to the industry but to the economy as a whole.”