Marketers Call For Price Liberalisation Of Petrol

The oil marketers, under the umbrella of Major Marketers Association of Nigeria (MOMAN), on Thursday called for full price liberalisation of Premium Motor Spirit (PMS), commonly known as petrol, instead of price modulation.

Its Chairman, Mr Tunji Oyebanji, who made the call in a statement on Thursday in Lagos, said that declaring full price deregulation would bring about long term stability in the downstream sector.

According to him, it becomes necessary for the association to state its position on the matter.
He said the Minister of State for Petroleum Resources, Chief Timipre Sylva, had recently announced that the Federal Government would implement a policy of “price modulation”.

The chairman said that price liberalisation would give effect to existing legislation, and enable it to set prices in line with the market realities through the Petroleum Products Pricing Regulatory Agency (PPPRA) as provided in its Act.

“The clear and obvious risk is that the country has never been able to increase pump prices under this law, leading to high and unsustainable subsidies and depriving other key sectors of the economy of necessary funds.

“Our current situation laid bare by the challenges of Coronavirus to the health of our citizens in particular, and the economy of our country in general, demand that we are honest with ourselves at this time.

“A fundamental and radical change in legislation is necessary,” Oyebanji said.
He said that the government had always been unable to increase pump prices for socio-political reasons when crude oil prices go up, leading to high subsidies.
Oyebanji noted that the only solution was to remove the power of the government to determine fuel pump prices altogether by law.

He said: “Purchase costs and open market sales prices should not be fixed, but monitored against anti-competitive and anti-trust abuses by the already established competition commission and subject to its clearly stated rules and regulations.

“There is no country or economy where governments do not have the power to influence prices. Nigeria is no different with respect to any other commodity or product.
“Governments use economic tools, such as taxes or interventions on the demand side or the supply side of the market and other administrative interventions to influence prices where it needs to.

“The problem here is that the government has retained for itself by law the power and the responsibility to fix pump prices of PMS.
“This is what puts it under so much pressure and costs the country so much in terms of under-recoveries or subsidies when it cannot increase prices when necessary to do so.

“It makes sense to relieve itself of this obligation now when crude prices are low and resort to influencing prices, using the same tools it does for any other commodity or item on the market.”
Oyebanji said the market should determine the price, and there should be a level playing field.
“Everybody should have access to foreign exchange to be able to import and sell petrol at a pump price taking its landing and distribution costs into consideration.
“Government should no longer fix petroleum prices. Health and the educational sector should be given a higher priority than paying for subsidy on petroleum.

“We support the pronouncement of the NNPC Group Managing Director, Malam Mele Kyari, which said subsidy or under-recovery must be things of the past,” he said.
According to him, downstream sector operators advocate for a market-based philosophy based on the sustainability of the petroleum industry.