N750 Petrol Rate: NMDPRA Calls for Caution, Says Regulator Won’t Cap Pump Prices

Emmanuel Addeh in Abuja

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday called for caution on information doing the rounds that the pump price of petrol will rise to N750 if subsidy is removed by June this year.

Speaking on Arise News last night, the Authority’s Executive Director, Distribution Systems, Storage & Retailing Infrastructure, Ogbugo Ukoha, also explained that the sector regulator will not be putting a price sealing on petrol prices.

Speaking at a session recently, the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Chinedu Okoronkwo, who was represented by IPMAN’s National Operations Controller, Mr. Mike Osatuyi, had revealed that Nigerians should prepare to pay up to N750 for every litre of petrol after the full implementation of the subsidy removal.

The 18-month period deferment of the deregulation of the downstream of the Nigerian oil and gas sector by the Muhammadu Buhari administration is expected to expire in June 2023 and the incoming government will have to deal with the consequences if it takes the decision within its first few weeks of taking over the reins of government.

However, Ukoha argued that bandying prices around will not do the market any good, insisting that while the NMDPRA will not put price caps on fuel prices after deregulation, it will continue to enforce certain cost benchmarks.

“I will caution that it’s unhelpful when we rush into speculating what prices might be, we can speak about the variables that will contribute to ultimately what the price will be and how we can mitigate that as well.

“But ultimately, prices will be will be determined by the forces of demand and supply and market forces. But we will not cap prices. I tell you what we will do: the Petroleum Industry Act (PIA) in Section 32 and 33 gives the authority clear powers to develop cost benchmarks and pricing frameworks.

“In real terms. We’re working towards how we can mitigate and eliminate cost inefficiencies. And I can list many cost of inefficiencies. We will for instance borrow a leaf from our neighbours who have worked with the Central Bank to  create pools because if you can dedicate sourcing of dollars it will also reduce the exposure.

“And once the refineries are working, you will also protect the naira from the shocks of the international market,” he noted.

Ukoha further argued that the price differences among states may not be markedly different, and will just be in terms of a few naira difference.

“First of all,  when we remove or eliminate some of the costs inefficiencies, I do not expect that the differences will be much, just here or there and might be a question of a few naira and kobos in terms of transportation costs,” he stated.