FG Scraps Petroleum Equalisation Fund, National Transport Allowance To Oil Marketers

Date:

June 4,2023.

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The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)

has revealed that the Federal Government has officially scrapped petroleum equalisation as well as the national transport allowance.

This is just as the Authority said it will no longer fix prices or release templates for petrol prices.

The PEF was set up by Decree 9 of 1975 (as amended by Decree Number 32 of 1989 now chapter 352 of the Laws of the Federation).

Its main function is to ensure price uniformity of petroleum products via the reimbursement of marketers for losses they incur in trucking products from depots to their filling stations anywhere in Nigeria.

The Authority Chief Executive (ACE), Engr Farouk Ahmed, explained that under the liberalised market, the forces of demand and supply would dictate prices.

He also stated that the NMDPRA and the Federal Competition and Consumer Protection Commission (FCCPC) will mount aggressive monitoring of activities in the downstream sector to prevent profiteering by petroleum marketers.

Ahmed said, “We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give licence to a prospective importer.

“The market is now open for everybody that wants to import as far as they meet all the requirements. So, it is not about the NNPC alone.

“For everybody in the sector, we make sure we guide their operations whether at the depot or wherever the product is but we will not put a cap to say this is what the price must be.

“As far as we are concerned in the NMDPRA, this is not like before when the PPPRA fixes the price. In a deregulated market, it is the market force that dictates the price.”

Ahmed explained that the NNPC’s role is to fix the prices of the petrol it imported and not take over the responsibilities of the Authority.

“In the case of the NNPC, the organisation is the sole importer at this point. We told the NNPC to recover its costs because they know how much it cost them to import the product and sell it.

“Of course, we also know how much shipping, offshore, ex-depot and ex-pump are. But we cannot tell them to sell at a price because the market is deregulated,” he said.

Ahmed further disclosed that marketers are now free to source their foreign exchange anywhere around the world to import petroleum products and then recover their costs without impediments.

On where the importers will source their forex from, Farouk said: “No. the CBN will not give dollar to anyone because it is an open market. Anyone willing to import should get the dollars from anywhere to import.

“Anyone willing to open a letter of credit from any part of the world can do that to import. That marketers can source their forex from anywhere is the beauty of the liberalised market that the NMDPRA has introduced based on the provision of the law.”

Though no template spells out the pricing components of petrol price, Ahmed hinted that the market will henceforth be modulated to allow the fluidity of prices.

He added, “This means that the price will no longer be static. It will depend on the international price of the gasoline market. But this does not imply that marketers can sell at any price.

“If we find that certain prices are way above the expected profit margin, we and the FCCPC can move in to curb such excesses because that will be profiteering. The market structure will dictate the price swings at every point in time.”

He maintained that the Dangote will help the nation in two ways, adding, “The refinery will give Nigeria easy access to petroleum products on-land for security reasons because it is within the Nigerian territory.

“Secondly, it will increase employment for our professionals.”

However, Ahmed was quick to caution against optimism for cheap petroleum products, saying, “I don’t think products will be cheaper because the company will be buying crude oil at the international price.

“However, it is going to be cheaper in terms of freight rate. Bringing of cargoes from Europe. Dangote Refinery is a game changer in terms of accessibility. By the time the NNPC refineries and other modular refineries across the country come on stream, Nigeria will be a net exporter of petroleum products.”(www.naija247news.com)

Peter Okafor
Peter Okaforhttp://Naija247news.com
Peter Okafor Financial Journalist | Editor | Contributor Overview: Peter Okafor is a seasoned Financial Journalist, astute Editor, and valued Contributor at Naija247news Media Group. With an unwavering passion for dissecting complex financial landscapes, Peter has become a trusted name in delivering incisive and insightful coverage of economic events, market trends, and corporate dynamics. Professional Journey Peter's journey in financial journalism has been marked by a commitment to excellence. Joining the ranks of Naija247news, he has consistently demonstrated a keen understanding of the intricate interplay between finance and the global socio-economic fabric. Expertise: Specializing in financial markets, economic analyses, and business developments, Peter Okafor has honed his expertise over the years. His ability to unravel intricate financial narratives and present them in a comprehensible manner sets him apart in the world of financial journalism. Contributions As an Editor and Contributor, Peter has played a pivotal role in shaping the narrative of Naija247news. His contributions extend to thought-provoking articles, in-depth market analyses, and coverage of key events that impact the financial landscape. Educational Background: Peter holds a degree in Journalism, complemented by specialized courses in Finance and Business Reporting. His educational foundation has provided him with the tools to navigate the intricate world of financial journalism. Innovation and Adaptability: In an era of evolving media landscapes, Peter Okafor exemplifies innovation and adaptability. Leveraging digital platforms and emerging technologies, he ensures that financial insights reach a diverse audience, fostering financial literacy and awareness. Awards and Recognition: Peter's commitment to journalistic excellence has not gone unnoticed. He has been the recipient of several awards, recognizing his outstanding contributions to the field of financial journalism. Vision for the Future: Looking ahead, Peter Okafor envisions a future where financial journalism continues to empower individuals, shape economic policies, and drive positive change. His dedication to staying at the forefront of financial news underscores his commitment to this vision. Connect with Peter Okafor: - LinkedIn: [Peter Okafor](#) - Twitter: [@PeterOkafor_N247](#) In the dynamic realm of financial journalism, Peter Okafor stands as a stalwart, combining experience, expertise, and a forward-looking vision to illuminate the path of financial understanding for a global audience.

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