Nigeria will henceforth allow the interplay of market forces in the determination of prices of petroleum products, particularly that of the Premium Motor Spirit, PMS.
Accordingly, the responsibility of fixing prices of the product will no longer fall within the realm of control of the PPPRA.
That responsibility now transfers to petroleum marketers whose actions are to be influenced by the dynamics of the market.
Ajuri Ngalele, one of the President’s spokesmen on Media related matters dropped the bombshell on Twitter Thursday.
“The Petroleum Products Pricing Regulatory Agency has removed the cap on the price of Premium Motor Spirit (PMS), giving marketers the freedom to fix the price of the commodity and sell above the price set by it.” Ngalele said.
The announcement eventually put an end to en era of wasteful expenditure often characterized by corruption, and demonstrated the willingness of the Buhari administration, which is getting ready to release billions of naira owed to some states, to commence the process of genuine economic deregulation.
According to NNPC sources, Nigeria consumes between 55 million and 60 million litres of petrol daily.
Statistics show that Nigeria may have spent approximately N60 billion in petroleum subsidy alone between 2018 and 2019, a whooping sum that most experts and analysts agree amounts to an unnecessary expenditure of precious funds.
In order to ensure that product gets to the people at the current pump price the NNPC spends an average of N39. 59 on every litre of petrol that it imports.
For the first time since it came on stream, the PPPRA would not be saddled with the mandate of directly regulating prices.
The measure would not however, result in the eclipse of the petroleum agency which would have to adapt to its new role in a completely deregulated sector.
“In exercise of the Powers conferred on it by Sections 7 and 24 at the Petroleum Products Pricing Regulatory Agency (Establishment) Act. No. 8 of 2003, and all other powers enabling it in that behalf, the Petroleum Product Pricing Regulatory Agency (The Agency), with the approval of the President hereby make the following Regulation:
“Short title: Market Based Pricing Regime for Premium Motor Spirit (PMS) using the Pricing Template of the Petroleum Products Pricing Regulatory Agency. The price cap per litre in respect of Premium Motor Spirit (PMS) is removed from the commencement of these Regulations. From the commencement of these Regulations, a market based pricing regime for Premium Motor Saint (PMS) shall take effect.
“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
“This regulation may be cited as the Premium Motor Spirit (PMS) Market Based Pricing Regime Regulations, 2020, made this 20th day of March, 2020″, the Executive Secretary of the Agency, Mr. Abdulkadir Saidu disclosed.
The decision to remove subsidies and allow forces of demand and supply to influence the price of Premium Motor Spirit is likely to have far reaching dimensions on the cost of everything else in the marketplace.
While strengthening democratic institutions, following the release of Executive Order 10, the Federal Government’s move in the economic sector means that Nigeria’s has entered a new era that may change its dynamics of managing the economy.