PPPRA Reviewing Pricing Templates For Oil Marketers—Abdulkadir

The Petroleum Products Pricing Regulatory Agency has said it is reviewing the cost elements and profit margins on the pricing templates for oil marketers.

The move, according to the agency, is expected to reflect current market-driven pricing regime.

The Executive Secretary, PPPRA, Saidu Abdulkadir, said this in a statement issued in Abuja.

The PPPRA said the pricing template which was last reviewed in 2016 would ensure consumers are not over-charged.

Recall that Nigeria commenced the implementation of a deregulated Premium Motor Spirit price regime on March 19, 2020 during the period of slowing global demand for crude and petroleum products.

This decision, according to the government, is to make prices more favourable for consumers as well as stimulate investment in the downstream.

Marketers, have in the past berated the government’s intervention and interest without allowing the market forces to drive the sector.

Defending the agency’s continued intervention despite running a deregulated market, Abdulkadir in the statement noted that the deregulation of the downstream sector was dependent on the enforcement of appropriate laws by strong regulatory agencies.

He said, “For the purpose of emphasis, let me reiterate that different sectors of the polity operate under the guidance of national regulators.

“The Central Bank of Nigeria regulates the banks and the financial sector; Nigerian Communication Commission regulates telecommunications; National Insurance Commission regulates the insurance sector and the same exists for operators in Nigeria’s downstream petroleum sector.

“To this end, it is not out of place for the agency to provide a guiding price band with the aim to protect consumers against price gouging.

“It is important to also state that there is nowhere in the world that deregulation means total lack of control, supervision or oversight.

“While the Market-Based Pricing Regime is a policy introduced to free the market of all encumbrances to investment and growth, it should not be misconstrued to mean a total abdication of government’s responsibility to the sector and citizenry.”

He added that the PPPRA no longer fix prices, but rather provides a guiding price template by monitoring petroleum products prices daily.

According to the Secretary, the PPPRA pricing template takes into consideration a number of factors which include petroleum product cost, and foreign exchange rate at which oil marketing companies import petroleum products, among others.

“This methodology is in line with international best practices which range from bi-monthly to monthly price reviews.

“Nigeria adopted the monthly review model considering the average duration for the importation of petroleum products into Nigeria from the closest spot market; North West Europe to West Africa is about 30 days.

“This period encompasses the import financing process to delivery at retail outlets,” he added

The PPPRA boss, however, said the new pricing regime would encourage marketers to resume supply of PMS, leading to further value creation in the downstream sector. 

He said this policy would foster job creation, ensure reasonable returns for investors, create healthy competition among marketers, enhance value for consumers and make funding available for other important infrastructure.