The pump price of premium motor spirit (petrol) would be adjusted monthly using market realities, the Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Abdulkadir Saidu has disclosed.
While consumers have seen the price of petrol come down in two consecutive months, Saidu said the monthly adjustment would continue even if the price of crude oil rises in the international market.
He disclosed this in a statement issued on Thursday in Abuja.
According to him, market fundamentals would henceforth guide the monthly price of petrol and other petroleum products like diesel and kerosene which would be brought under the price modulation mechanism of the government.
He explained: “The Market-based pricing regime came into effect 19th March, 2020, following Government’s approval for the adjustment of PMS Price from N145.00 to N125.00/litre. Going forward, pricing of PMS will reflect market fundamentals. PPPRA will continue to monitor price trends and advise monthly guiding price for all petroleum products, based on prevailing market realities and other pricing fundamentals”.
He said the new policy was due to the “recent plunge in the prices of crude oil and petroleum products occasioned by the outbreak of Coronavirus pandemic and slowing global oil demand, had a direct bearing on the Expected Open Market Price (EOMP) pushing it to a level below the pump price cap of N145.00 per litre.
“In line with government’s commitment to the welfare and common good of the populace, the government directed NNPC, being the sole supplier of PMS into the country at that point, to review downward its Ex-Coastal price of the product for sale to other Marketers to reflect the current low oil price for the benefit of Nigerians.
“Furthermore, the plunge in global crude prices made it increasingly difficult for Government to finance the 2020 National budget as it was predicated on a crude price of $57 per barrel. The low crude oil prices, therefore, presented the opportunity to address the lingering challenges associated with the Under/Over-Recovery regime and free up vital funds required to develop in other key sectors of the economy.
“Additionally, the new initiative is expected to stimulate private investment and growth in the downstream sector and encourage the resumption of products importation by Oil Marketing Companies, translating to more job creation as many depots and facilities that were dormant would now become active”, he added.
Explaining what would happen when the price of crude rises, he said: “What we have in place is a market reflective pricing system. Petroleum products prices will be adjusted in line with market realities and the result is what we see presently with prices on the downward slide. Accordingly, price will naturally be adjusted to reflect a true picture of market fundamentals at any particular period (high or low).
“Also, efforts are being put in place to develop alternative fuels to PMS by deepening the utilization of LPG/CNG as Autogas in Nigeria. This will come into fruition in the medium term and will help to cushion the effect in case of situation of high oil price.
“The liberalized pricing regime will ensure a competitive and more efficient PMS market that guarantees reasonable returns to Operators and ensure consumers pay appropriate prices in line with market reality and ensure they are not over-charged.
“In addition, strict compliance to the price band at retail outlets will be ensured through effective monitoring and enforcement of extant regulations”.
The Federal Government had in March reduced the pump price of petrol from N145/litre to N125/litre. It again lowered the price to N123.50/liter on April 1. However, most independent marketers have to sell at the new rate with most filing stations dispensing at the March price of N125/litre.
But with crude oil trading around $20 per barrel in the past month, the consumers are expecting further reduction in the price.
