Barely 24 hours after depot owners called for full deregulation of the downstream sector of the petroleum industry, the Nigerian government has said it is already implementing the policy.
The Petroleum Products Pricing Regulatory Agency (PPPRA), the government agency that regulates petroleum products prices in the country, in Abuja on Tuesday, said the sector is now fully deregulated as it no longer fixes fuel prices.
On Monday, depot owners under the platform of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) urged the government to introduce full deregulation policy without delay to enhance the growth of the petroleum industry and ensure the development of the country’s economy.
The Chairman of DAPPMAN, Winifred Akpani, who is also the Managing Director/Chief Executive Officer of Northwest Petroleum and Gas Company Limited, said a full deregulation of downstream sector operations would ensure seamless business and enhance transparency, competitiveness and sustainable growth.
Reacting to the call, PPPRA said since the introduction of the deregulation policy in March, it has ceased to play any role in determining fuel prices.
The agency’s Executive Secretary, Abdulkadir Saidu, said under the new arrangement, marketers are now solely responsible for determining retail fuel prices in the country based on market fundamentals.
In April, the Minister of State for Petroleum Resources, Timipre Sylva, had said the deregulation policy, a fuel price modulation mechanism would be established to determine prices.
The minister said the government would no longer be directly involved in fixing fuel prices, but the private sector would be allowed to take over the process through the marketers.
The arrangement, he said, would allow the government to focus on its traditional role of monitoring and enforcing compliance with regulations to avoid profiteering by the marketers.
The minister said the PPPRA would establish a special committee to monitor market fundamentals, including cost of foreign exchange, bank interest rate by importers of petroleum products, to provide a monthly price advisory to fuel marketers.
Mr Sylva said the committee would include all the players in the fuel market, including the Major Oil Marketers Association of Nigeria, Depot and Petroleum Products Marketers Association of Nigeria, Independent and Petroleum Marketers Association of Nigeria.
Between April and June, the committee, at the beginning of every month, gave fuel price advisories in the form of a fuel price band within which marketers’ retail prices were expected to fall.
Initially, based on the advice by the PPPRA, fuel price was in April adjusted from N145 per litre to a band of N125 and 123 per litre in April. In May, the price was adjusted further to a band of between N121.50 and N123.50 per litre, and later in June to price band of between N140.80 and N143.80 per litre.
However, since July, the PPPRA has not issued a formal price advice to give a price band for the fuel marketers, resulting in price regimes that confuse the public about the indices the marketers used to arrive at them.
Since then, consumers have relied on ex-depot prices issued by the Petroleum Products Marketing Company (PPMC), the distribution and marketing arm of the NNPC, to guess retail fuel pump prices.
Ex-depot prices are those given to fuel marketers and depot owners to lift petroleum products from NNPC depots for onward distribution to retail outlets across the country.
Critics have accused the government and the PPPRA of abandoning consumers to fuel marketers to exploit with arbitrary prices.
Asked if the PPPRA has abdicated its responsibility, its Executive Secretary, through the General Manager, Administration and Human Resources, Victor Shidok, said the role of the agency has since been restricted to monitoring oil marketers against profiteering.
“Going forward, fuel prices would be determined by the forces of demand and supply and the international cost of crude oil. We will not get involved to avoid being accused by Nigerians of continuing to fix prices.
“Every petrol marketer is free under the current arrangement to source for products and determine their prices in a way that would allow them to remain in business.
“However, this must be in accordance with our code of conduct established for all operators. As the regulatory authority, the PPPRA has a duty to protect the consumers, while ensuring the operators abide by our codes of conduct,” Mr Saidu said.