Following the price liberalisation of the downstream sector of the oil market, the Petroleum Product Pricing Regulatory Agency (PPPRA) said on Monday that, Nigerians should get prepared to pay a higher price or low price on petroleum depending on how the market forces swing the pendulum.
The PPPRA Executive Secretary, Abdulkadir Saidu made this known while answering a question on the new PMS price regime in Nigeria.
He said the agency is making a frantic effort with the Central Bank of Nigeria to determine the Applicable foreign exchange rate for the importation of the petroleum products by oil marketers.
Saidu 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.”
The Executive Secretary noted that effort is in top gear to develop an alternative to the fossil fuel through deepening the utilisation of liquefied petroleum gas/compressed Natural Gas as autogas in Nigeria.
He said this would come into fruition in the medium term and would help to cushion the effect eventually there is hike in the PMS Price.
However, he said the agency is working hard to arrive at a good foreign exchange rate that would be comfortable to all in terms of the price affordability to the oil marketers.
Saidu said, “The agency is engaging with the CBN to determine the applicable forex rates for the importation of petroleum products and modality for accessing the applicable forex window by marketers.
“This rate is reflected in the pricing template to determine the Expected Open Market Price of the product.
This means that going forward, the guiding price to be advised will be determined based on the rates quoted by the CBN.”
He said the price would guide the sale in Nigeria, saying the agency is planned the same gesture to both kerosene and diesel.
He revealed that the essence of the price efficiency that would be beneficial to both the marketers and the consumers.
He pointed out that the market-based pricing regime came into effect on March 19 following government approval for the downwards review of the PMS Price from N145 to N125/litre.
“Going forward, pricing of the PMS will reflect market fundamentals.
The 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 stated.
Saidu said following the outbreak of the COVID-19 and its consequent effect on the global crude oil price, it has a direct bearing on the EOMP of petroleum that pushed the price downwards below the N145/litre.
He, therefore, disclosed, “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 other key sectors of the economy.”
The new initiative would also stimulate private investment in the downstream sector and encourage the resumption of products importation by marketers, a development that would revive many dormant depots he said.
He expressed optimism that the upcoming Dangote Refinery and other modular refinery projects nationwide would be able to key into the new pricing regime.
