FG Explains Why Marketers Can’t Exclusively Determine Petrol Prices

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Timipre Sylva

Emmanuel Addeh in Abuja

The federal government has thrown more light on what it described yesterday as the full deregulation of the downstream petroleum sector, and clarified that the country could not afford to completely leave marketers to determine the pump prices of petrol.

The government said that given recent experiences with petroleum marketers, any attempt to give them a free hand to decide the selling price of the product would lead to profiteering.

Minister of State for Petroleum, Chief Timipre Sylva, told reporters thursday in Abuja that there was no argument as to whether the federal government had fully liberalised the downstream sector, adding that petrol was too strategic to be left for those who are mostly interested in profits.

He said: “What we announced was already deregulation. But as we all know, petrol and petroleum products are very strategic commodities; so, you cannot allow the price of this commodity to be determined wholly by the marketers.

“It’s the government’s responsibility to protect consumers because anywhere in the world if you want to buy anything, there is the recommended retail price. The consumer protection agency will fix a price so that no one will profiteer inordinately from the people.

“If we allow marketers to go ahead and be fixing prices as they like, it will not be good for our people because this commodity is very central to the lives of our people. That’s why you have a regulator for that sector that will determine the price, bearing in mind what it has cost the marketers to land the product, allowing for some profit for them, making sure the consumer is also protected.”

The minister noted that, for instance, since the fall in the international prices of crude oil in the international market, the marketers have refused to slash the prices they sell diesel and other products.

He added: “If the PPPRA does not work with the marketers, they will profiteer from the people. Look at one problem we have been having with the marketers. For example, today we have brought down the price of PMS because the landing cost came down.

“But the landing cost of diesel should have also come down, but the marketers have refused to bring the price down. We have been having a running battle with them to bring their prices down because their landing cost has also reduced.

“It is government’s role to protect the consumer. The PPPRA is to protect the consumer. We said they should not announce (the template for May) because it’s not necessary, after all, FAAN determines prices of airline tickets, but they don’t announce it every time.

“They just discuss with operators and agree and increase whatever the ticket price is. The central bank regulates interest rates with the banks, they discuss with the banks. PPPRA will work with marketers to ensure the best pricing for consumers.

“Prices can go up and will go up. That’s why we are in the race to introduce CNG (Compressed Natural Gas) which is a cheaper fuel. If people decide to keep running on petrol, others will migrate to CNG.

“It has been completely deregulated. Today is not when we announced it. The issue of price modulation is what is confusing many. That is why the price is not stationary because it will make it regulated all over.”

He explained that the ministry had brought down the daily consumption of fuel from over 60 million to about 52 million per day while the DPR has also launched the crude oil lifting and tracking system, which tracks all crude oil being exported from Nigeria.

“We have been able to eliminate completely losses from the terminals, so the 60,000 to 100,000 barrels that we lose sometimes is usually from the pipelines system. We have confirmed this when we gave barging permits to companies to barge crude, we didn’t record any losses,” he added.

On natural gas penetration, the minister lamented that Nigeria’s deployment of gas for domestic uses was one of the lowest in the continent.

He, however, said the rollout of a programme to ensure that rural areas use natural gas would begin in June.

“What we are trying do is to get our people to use it more. We have one of the lowest penetrations in the whole of Africa. Some of you will be surprised to know that Nigeria has one of the lowest in Africa, in fact, Niger Republic has a higher LPG penetration than Nigeria,” he stated.