The Petroleum Products Pricing Regulatory Agency (PPPRA) on Sunday disclosed that it is reviewing the pricing templates for petroleum products to ensure that consumers are not over-charged by marketers as crude oil price rises.
The Executive Secretary of PPPRA, Mr. Saidu Abdulkadir, explained that despite the deregulation of the downstream sector of the petroleum industry, measures have been put in place to protect consumers.
While admitting that there have been some challenges in the transition period, he stated that the monthly petrol price review adopted by the agency has worked well.
According to him, “transitioning to a fully deregulated market comes with its growing pains. Major challenges witnessed during the transition period which impacted PMS pricing include: holding stock of products bought at higher prices, non-availability of foreign exchange for importation of petroleum products and slow depletion of stock due to the Covi-19 pandemic. These challenges are currently being managed.
“On a positive note, the PPPRA is currently finalising the review of cost elements and profit margins on the pricing template for marketers to reflect the current market-driven pricing regime, which was last reviewed in 2016 while ensuring that consumers are not overcharged”.
Abdulkadir who gave a breakdown of the template components said: “PPPRA pricing template takes into consideration a number of factors which include amongst others: Petroleum Product Cost, Foreign Exchange (Forex) rate at which Oil Marketing Companies (OMCs) import petroleum products, other associated cost components that include freight rate, trans-shipment cost, statutory charges (NPA, NIMASA), terminal charges (storage and Jetty throughput), financing and distribution margins (Wholesalers/Marketers, Transporters, Retailers, Bridging Fund and Administrative Charges)”.
He explained while the agency would not directly fix the pump price of petrol, it will continue to provide guidance on the cost of the product.
“The Agency does not fix prices but rather provides a guiding price band by monitoring petroleum products prices daily; using the average price of the previous month to determine prices for the following month, for appropriate cost reflective pricing that ensures reasonable returns to Oil Marketing Companies (OMCs).
“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 importation of petroleum products into Nigeria from the closest spot market; Northwest Europe (NWE) to West Africa (WAF) is about 30 days. This period encompasses the Import Financing Process to delivery at retail outlets”, he added.
ExpressDay recalls that the Federal Government had on March 19, 2020 announced that it would no longer subsidise the pump price of petrol following a huge drop in its revenue due to the fall in the international market price of crude oil.
Nigeria, a major crude oil export, imports almost all its petrol following the inability of the national oil company, the Nigerian National Petroleum Corporation (NNPC) to keep the its four refineries operational.
