Marketers have held meetings with the Nigerian Petroleum regulatory authorities, seeking answers to possible market dominance by the Nigerian National Petroleum Company Limited-(NNPCL) and Dangote Petrochemical Refinery.
They also want the NNPCL to commence publication of a pricing template that would guide marketers on appropriate pricing.
On Tuesday, September 3, the NNPCL commenced gradual price movement of premium motor spirit (PMS), in its filling stations retail outlets across the country.
The price movement followed the announcement by Nigerian business mogul Aliko Dangote that his Refinery-Dangote Petrochemical Refinery is ready to hit the market in the next 48 hours.
Marketer sources said the current pricing by the NNPCL is not yet market-reflective, urging the publication of a proper template for pricing to ward off possible arbitrage.
They further argued that the publication would ensure proper deregulation of the petroleum downstream sector, devoid of a price control and uncertainty regime which are the main trigger of long fuel queues.
“The major marketers had a meeting on Monday and there’s another scheduled meeting in the coming week. The thrust of the meeting is to ensure that NNPCL opens up more on pricing,” an oil sector governance expert and a consultant in the petroleum sector, Henry Ademola Adigun told The ICIR.
“Dangote and NNPCL want to be the major price determinant in the market such when NNPCL buys from Dangote, it then determines whom it sells to,” he added.
He stressed that the plan could distort the market and not allow the deregulated market to open up accordingly.
“We may keep having long queues if the market is not opened up properly and that’s not healthy for the economy. The uncertainty is breeding more hardship on the neck of Nigerians,” he said.
“As I said, NNPCL is yet to open up and tell us what the actual price should be, publish the price on paper, so that everyone (marketers) can no different price specifications across the country.
He added that the NNPCL needs to deregulate properly, noting that, “As it stands now, no one can compete with Dangote.
A former chairman of the Major Oil Marketers Association of Nigeria MOMAN, Adetunji Oyebanji, confirmed to the ICIR that a discussion on the market-reflective pricing for marketers has been held.
“Yes, discussions are going on. We want market-reflective pricing, it would help to open up the petroleum business and that would be the forever end of the long and recurring fuel queues. Good to know, the government is already speaking up on market forces determining price, we are gradually getting there,” he added.
The Petroleum Industry Act (PIA), which was signed into law in August 2021, was aimed at reforming the country’s oil and gas industry, including the downstream sector.
One of the key objectives was to encourage competition and attract private investment in the importation and distribution of petrol.
Conversely, the reality paints a different picture as the NNPCL has sustained a price pegging situation that has worsened competition in the ‘deregulated’ petroleum business with many licensed marketers unable to break even into the market.
The ICIR has earlier reported, informed that the NNPCL’s executive vice president, downstream, Adelapo Segun, has confirmed that the current upward price movement of petroleum products is not yet market reflective, adding that Nigerians should anticipate a further price hike.
“What I can tell you is that the pump price today is still not marker reflective. If we are, we should move towards market-reflective pump prices so the competition can kick in.
“If you look in Section 25 of the PIA that gave rise to the NNPCL, it tells you that petroleum prices will be based on unrestricted free market conditions, “he added.
Another energy expert suggested to the government to ensure more local refineries have access to crude to lessen the fears of price control and overreliance on NNPCL and Dangote on PMS pricing.
“The government must ensure the supply of crude to local refineries. This would ensure that more licensed operators get into the business and the market properly deregulated to ensure price stabilisation,” a professor of energy economics, Adeola Adenikinju told The ICIR.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.