The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said that in view of the removal of petrol subsidy, market forces will now be used to determine price.
It said because the market is now deregulated, it will no longer fix prices or release templates for petrol prices.
The Authority Chief Executive (ACE), Engr Farouk Ahmed, explained that under the liberalized market, market forces are allowed to dictate prices.
“We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give license to a prospective importer.
“The market is now open for everybody that wants to import as far as they meet all the requirements. So, it is not about the NNPC alone.
” For everybody in the sector, we make sure we guide their operations whether at the depot or wherever the product is but we will not put a cap to say this is what the price must be. As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price. In a deregulated market, it is the market force that dictates the price.”
Ahmed explained that the NNPC’s role is to fix the prices of the petrol it imported and not take over the responsibilities of the Authority.
“In the case of the NNPC, the organization is the sole importer at this point. We told the NNPC to recover its costs because they know how much it cost them to import the product and sell it. Of course, we also know how much shipping, offshore, ex-depot and ex-pump are. But we cannot tell them to sell at a price because the market is deregulated,” he said.
The NMDPRA chief also revealed that the Federal Government has officially scrapped petroleum equalization as well as the national transport allowance.
He also stated that the NMDPRA and the Federal Competition and Consumer Protection Commission (FCCPC) will mount aggressive monitoring of activities in the downstream sector to prevent profiteering by petroleum marketers.
To this end, he said marketers are now free to source their foreign exchange anywhere around the world to import petroleum products and then recover their costs without impediments.
On where the importers will source their forex from, Farouk said: “No. The CBN will not give dollars to anyone because it is an open market. Anyone willing to import should get the dollars from anywhere to import. Anyone willing to open a letter of credit from any part of the world can do that to import.
“That marketers can source their forex from anywhere is the beauty of the liberalized market that the NMDPRA has introduced based on the provision of the law.”
Though no template spells out the pricing components of petrol price, Ahmed hinted that the market will henceforth be modulated to allow the fluidity of prices. “
