The Petroleum Products Pricing Regulatory Agency (PPPRA) has on Thursday, announced the removal of the price cap on petroleum products, giving marketers the right to fix prices and sell as they deem fit.
The agency communicated the decision through a document signed by its Executive Secretary, Mr. Abdulkadir Saidu, which was titled: Market Based Pricing Regime for Premium Motor Spirit (PMS) Regulations, 2020.
The document stated that henceforth, the PMS pricing will be determined by market forces, but the agency will continue to monitor the oil market and offer the Nigerian National Petroleum Corporation (NNPC), and marketers, advice on monthly pricing.
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The document said: “In exercise of the powers conferred on it (PPPRA) 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, with the approval of the president, hereby makes the following regulation.
“Short title: Market Based Pricing Regime for Petroleum Motor Spirit (PMS) using the Pricing Template of the Petroleum Products Regulatory Agency.
“The price cap per liter 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 Spirit 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 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 Market-Based pricing Regime Regulations, 2020.”
The PPPRA said it is acting within the powers bestowed on it by the provisions of the PPPRA (Establishment) Act 2003, to notify the general public of the development with effect from March 2020.
In reaction to this development, Nigerians have expressed conflicting opinions. While many believe that the move is long overdue, others think it’s cynical of the federal government to make the decision now.
Former vice president Atiku Abubakar, who has been advocating the removal of petrol subsidy and the privatization of the NNPC, couldn’t hold back his joy at the news.
He said: “FG finally withdraws from the fuel subsidy and price-fixing bazaar that had been rife with corruption and stalling investments. This is something patriots have been calling for and for which I was demonized. The stoppage of subsidy and price-fixing is a right move, although it should have come earlier when the economy was stronger.”
He urged states and the federal government to remove other impediments in order to facilitate the functionality of the refineries in the country.
“FG and state governments should proceed to remove other impediments and roll out incentives to spur investments in the sector, especially the numerous refineries that had been licensed but are yet to be built. Then ensure the quality of fuel meets set standards,” he said.
The development is seen as one of the needed changes that the COVID-19 pandemic has forced the Nigerian government to make, though many don’t see it in that light.
The concern of those who think it’s cynical for the federal government to sanction the total removal of subsidy now appears to be stemming from the rising oil price. As of Thursday, the Brent Crude has gone up to $42 per barrel, signaling a future increase. That means, the marketers will move the price upward according to the global market price and the people will bear the brunt.
“Very soon Nigerians will know the effect of this ill-thought out policy of the FG (dictated by IMF). As crude oil price rises, so will the price of petrol & diesel. In no time, disposable income will be impacted, industries will raise prices of goods & services + general price hike,” Oladimeji, a concerned Nigerian wrote in response to the news.
Many others share his sentiment, with the economy in turmoil; the burden of the subsidy removal will fall squarely on the poor. Small businesses that depend on generators for power supply will be forced to increase the prices of goods and services, transport operators will also increase the fares to reflect the current pump price.
It is believed that while the removal of fuel subsidy has come with inevitable pains, it has also solved two major problems: It has eliminated the corruption that has over the years become an integral part of the subsidy regime, and it will put a lot of money in the government’s purse and minimize the culture of borrowing.