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By Codratus Godson and Gladys Nweke
Deregulation of Nigeria’s downstream oil sector may have emerged at last, thanks to COVID-19 and its economic consequences including crash of the oil industry. The FG has not only cut back prices of fuel and oil products but has done what the industry has been saying; deregulate the market to allow market dictate prices.
Nigeria Government on Wednesday ordered the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Products Pricing Regulatory Agency (PPPRA) to immediately reduce the price of Premium Motor Spirit (PMS) also known as petrol, to N125 per litre.
This is coming on the heels of a sharp decline in the price of crude oil in the international market to below $30 per barrel. Fears are rife that it may crash to $20.
As a result of the Federal Government directive, the NNPC announced that effective immediately, all its retail outlets had been directed to commence the sale of the commodity at N125 per litre. This means that crude fell by over 50 per cent but fuel fell to about a mere 15 per cent.
The PPPRA disclosed that in the next couple of hours, it would be coming up with the appropriate price after considering current realities and market dynamics.
In a statement in Abuja, Minister of State for Petroleum Resources, Chief Timipre Sylva, stated that the drop in crude oil prices has lowered the expected open market price of imported petrol below the official pump price of N145 per litre, adding that President Muhammadu Buhari had, therefore, approved that Nigerians should benefit from the reduction in the price of PMS which is a direct effect of the crash in global crude oil prices.
He noted that based on the price modulation template approved in 2015, the Federal Government had directed the NNPC to reduce the Ex-Coastal and Ex-Depot prices of PMS to reflect current market realities.
Sylva added that the PPPRA would subsequently issue a monthly guide to NNPC and marketers on the appropriate pricing regime.
He said, The Agency is further directed to modulate pricing in accordance with prevailing market dynamics and respond appropriately to any further oil market development.
It is believed that this measure will have a salutary effect on the economy, provide relief to Nigerians and will provide a framework for sustainable supply of PMS to our country. The Ministry of Petroleum Resources will continue to encourage the use of Compressed Natural Gas to complement PMS utilization as transport fuel.
At the same vein, in a separate statement made by the Group Managing Director of the NNPC, Mallam Mele Kyari, disclosed that in compliance with the directives of the Honourable Minister of State for Petroleum Resources on PMS pricing, the corporation has reviewed its Ex-coastal, Ex-depot and NNPC Retail pump prices accordingly.
He said, Effective 19th March 2020, NNPC Ex-Coastal price for PMS has been reviewed downwards from N117.6 per litre to N99.44 per litre while Ex-Depot price is reduced from N133.28 per litre to N113.28 per litre.
These reductions will therefore translate to N125/litre retail pump price. Despite the obvious cost implication of this immediate adjustment to the Corporation, NNPC is delighted to effect this massive reduction of N20/litre for the benefit of all Nigerians.
Accordingly, all NNPC Retail stations nationwide have been directed to change the retail pump price to N125 per litre.