On March 18, 2020, President Muhammadu Buhari approved a 13.8 per cent or N20 reduction in the retail pump price of Premium Motor Spirit (PMS), otherwise known as petrol, from N145 to N125 per litre. The reduction also affected AGO (diesel) and kerosene.
The Minister of State for Petroleum Resources, Mr. Timipre Sylva, told journalists in Abuja that, “The drop in crude oil prices (due to the rampaging COVID-19) has lowered the expected open market price of imported petrol below the official pump price of N145 per litre. Therefore, Mr. President has approved that Nigerians should benefit from the reduction in the price of PMS; which is a direct effect of the crash in global crude oil prices.”
This will be the third time the prices of petroleum products would be adjusted since President Buhari assumed office in May, 2015.
First, on May 11, 2016, he announced the removal of fuel subsidy to allow market forces determine retail fuel prices in the country. With this, the price of petrol reduced initially to N86.50 from N87 before adjusting upwards to N141 per litre. Later, the price was adjusted further upwards to N145 per litre.
The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari, in announcing the review of ex-coastal, ex-depot and NNPC retail pump price, said “effective March 19, 2020, NNPC ex-coastal price (consisting cost and freight charges) for PMS has been reviewed downwards from N117.6 to N99.44 per litre, while ex-depot price is reduced from N133.28 to N113.28 per litre.” These reductions translated to N125 per litre of retail pump price.
The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Alhaji Abdulkadir Saidu, subtly announced the kick off of deregulation of the petroleum products market in Nigeria, stating that the “new price will guide PMS pricing in Nigeria for the rest of the month of March, 2020. Going forward, PPPRA will continue to monitor trends in market fundamentals and announce a monthly Guiding/Expected Open Market price at the beginning of every month, effective April 1, 2020.”
Alhaji Saidu added that it gave Nigeria a more transparent pricing model, would stimulate investment growth in the downstream sector and encourage resumption of products importation by oil marketers.
Generally, a reduction in the pump price of petroleum products is a welcome development any day. But we should note that this has become so because the country permanently relies on imported fuel for its sustenance.
But the elephant in the room is that the government, by the stance of PPPRA, is saying that from now, oil prices should reflect the price of crude in the international oil market. This means that for the Federal Government, we have formally entered the era of deregulation.
Our stand is that if the government should deregulate the oil sector, this is the wrong time to do it. What we have now in the world, of which Nigeria is not exempted, with the COVID-19 pandemic, is a crisis situation. Sliding in deregulation now could be ambush of Nigerians.
If the Federal Government wants to deregulate the oil sector, it should wait for the crisis situation to stabilise. Then, it can bring it on and present deregulation as a stand-alone issue and Nigerians would have a national consensus built around it.