TRACKING______Oil marketers under the umbrella of Major Marketers Association of Nigeria (MOMAN) have called for fuel price liberalisation that is backed by law rather than price modulation, especially as it concerns premium motor spirit (petrol).
MOMAN Chairman, Mr. Tunji Oyebanji, stated that full price deregulation would bring about long-term stability in the downstream sector. He said it had become necessary for the Association to state its position.
He said the Minister of State for Petroleum Resources, Chief Timipre Sylva, recently announced that the government would implement a policy of “price modulation” which means it will give effect to existing legislation enabling it to set prices in line with market realities through the Petroleum Products Pricing Regulatory Agency (PPPRA) as provided in its Act.
To him, 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.
Oyebanji said: “Our current situation shows a fundamental and radical change in legislation is necessary. When crude oil prices go up, government has always been unable to increase pump prices for socio-political reasons leading to high subsidies and we believe the only solution is to remove the power of the government to determine fuel pump prices altogether by law.
“Purchase costs and open market sales prices should not be fixed but monitored against anticompetitive and antitrust 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 government has retained for itself by law the power and the responsibility to fix pump prices of PMS which 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.
“We want the market to determine the price. There should be a level playing field. Everybody should have access to foreign exchange (forex) 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 educational sector should be given a higher priority than paying for subsidy on petroleum. We support the pronouncement of the NNPC Group Managing Director, Mallam Mele Kyari, which said subsidy or under-recovery must be things of the past.”
