Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said henceforth, the price of Premium Motor Spirit (PMS) will be determined by market forces, ushering in a new era of unregulated pricing in the Nigerian oil market.
The new approach was announced on Friday by Farouk Ahmed, the head of the regulatory agency, during a press briefing in Abuja.
“The market structure will dictate the price swings at every point in time,” he said.
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Ahmed explained that the NMDPRA will no longer fix prices or release templates for petrol, although the agency will team up with the federal government and Consumer Protection Commission to monitor the market to prevent profiteering by petroleum marketers.
The move has become necessary following the removal of fuel subsidy, which was announced by President Bola Tinubu on Monday.
Ahmed said that market forces would henceforth dictate prices under the liberalized market, as the NMDPRA would issue import licenses to more marketers to create a competitive market.
“As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price; in a deregulated market, it is the market force that dictates the price.
“So, it is not about the Nigerian National Petroleum Company Limited alone. We put the regulation in place, we make sure quality control is complied with; we make sure the product is there and we give licenses to prospective importers.
“We make sure we guide the operations of everyone in the sector whether at the depot or wherever the product is but we will not put a cap to say this is what the price must be,” he said.
Ahmed further explained that under the liberalized market, petroleum pump prices will be determined by international prices. He added that the market would henceforth be modulated to allow the fluidity of prices.
“Based on this, the price would no longer be static but rather depend on the international price of the gasoline market,” he said, adding that this did not imply that marketers could sell at any price.
He assured that the NMDPRA and FCCPC will collaborate to curb excesses if certain prices were way above the expected profit margin.
In the wake of the fuel subsidy removal, business leaders have called for the issuance of licenses to more marketers to ensure an adequate supply of PMS across the country and to reduce the price per liter.
The removal of the fuel subsidy saw the prices of PMS go as high as N488 – N557 per liter, stoking economic chaos as Nigerians lamented that the new pump prices are unaffordable.
However, the statement from the NMDPRA supports the assertion that Dangote Refinery, which is expected to start pumping refined petroleum products in July, is not the ultimate answer for cheaper PMS. Many have expected the price of fuel to go down as soon as the refinery becomes functional.