The Petroleum Products Pricing Regulatory Agency (PPPRA) is discussing with the Central Bank of Nigeria (CBN) on ways to make foreign exchange (forex) accessible to private oil marketing companies seeking to import petroleum products into the country.
The agency’s Executive Secretary, Abdulkadir Saidu, gave this hint in a statement issued on Monday.
According to him, the engagement with the CBN is aimed at determining the applicable forex rates for the importation of petroleum products and modality for accessing the applicable forex window by the marketers.
Stating that the rate is reflected on the pricing template to determine the expected open market price of the product, Saidu explained that this means that going forward, the guiding price to be advised, will be determined based on the rates quoted by CBN.
He clarified: “The price is expected to guide the sale of PMS in Nigeria. In fact, we plan to extend the same pricing mechanism to Aviation Turbine Kerosene (ATK), Automotive Gasoline Oil (AGO), among others. The whole essence of the price band is to ensure price efficiency that is beneficial to both the consumers and oil marketers.”
The PPPRA Executive Secretary maintained that the country’s existing refineries were expected to play key roles in the current fuel pricing regime, stressing that the policy would also create immense opportunity for increased private sector participation in the industry.
He expatiated: “At the end of the day we expect to see more private players operating in the industry. The liberalization of the entire industry will make it possible for private investors to recoup their investments, leading to a more vibrant downstream sector.
“However, in order for the nation’s refineries to continue producing fuels, the authorities in charge of the refineries need to fix the refineries and ensure they come back on stream at optimal level. We believe the upcoming Dangote Refinery and other modular refinery projects nationwide will be able to key into the new pricing regime”, the industry expert added.
Saidu clarified that the decision of the Federal Government to adopt the current PMS pricing regime was borne of the need to conserve scarce resources and the pressure the collapsing prices of crude oil in the international market brought on the revenue of the government.
He said: “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”, he added.