By Ikenna Omeje

Oil marketing companies have recommenced the importation of Premium Motor Spirit (PMS), also called petrol, bringing a total of 536,000 metric tonnes into the country directly, in response to the full deregulation of the downstream petroleum sector by the Federal Government in March.

This was made known in a statement by the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Saidu Abdulkadir, in Abuja on Sunday. He said the policy has brought about increased investment in local refining and would foster healthy competition thereby bringing product prices down.

“Since the commencement of the new price regime which heralds full deregulation of the sector, a considerable increase in the level of Oil Marketing Companies’ (OMC) participation in Premium Motor Spirit’s (PMS) also known as petrol, importation has been recorded. In recent years, OMCs withdrew from product importation, but since the Federal Government’s pronouncement on 19th March 2020, over 536,000 metric tons of PMS have been directly imported by the OMCs.

“Additional investment in local refining is gaining traction and is expected to engender more competitive pricing. The Dangote Refinery with a refining capacity of 650,000 barrels per day will certainly impact positively on the price of PMS in the market when it commences operations in 2022. We expect to see more investment in modular and conventional domestic refining going forward,” the PPPRA boss said.

 He further noted that applicable petroleum products cost accounts for about 80 per cent of the pump price of petroleum products. “Correspondingly, if the price of crude oil is low, it stands to reason that pump prices will come down and similarly, when prices increase, pump price will be expected to go up reflecting market trends.

“In the same vein, Foreign Exchange (Forex) rates also play a significant role in determining the guiding pump price of petroleum products. Forex availability to importers is very essential in enabling marketers procure the products and sell at Expected Open Market Price (EOMP). To this end, the Agency is engaging with the Central Bank of Nigeria (CBN) to ensure availability of the required Forex for the importation of petroleum products and the modality for marketers to access Forex at the applicable window.” he stated.  

 Abdulkadir maintained that the goal of the new market-based pricing is to promote growth in the industry and not to harm consumers of PMS.

He said, “The Agency is cognisant of the public outcry trailing the recent surge in petroleum products prices. However, this decision is a reflection of the new market-based pricing system, which does not seek to harm consumers but foster growth in the sector and prevent wastages resulting from subsidy.

“The recent upward movement in pump price is becoming a bone of contention because of the fragile state of the economy. However, deregulation of the sector is in the country’s best interest because competition has a way of forcing down prices and ensuring that companies place a tight rein on production cost such that wastes that could be passed on to consumers in form of high prices are eliminated.

According to him, “The trillions of Naira that would have been spent subsidizing PMS could be injected into other key sectors such as agriculture, education, health, power and infrastructure. There will also be focus on the provision of social safety nets for the poor who bear the brunt of the COVID19 pandemic.”