‘Downstream deregulation imperfect despite price jumps’ — MOMAN

[By Sopuruchi Onwuka]

Despite the persistent increases in the price of refined petroleum products in the country, players are still not satisfies with the mode the ongoing reforms in the market is driven.

Mr Tunji Oyebanji, MD 11 Plc

The Oracle Today reports that petrol prices in the domestic market has maintained a streak of increases at the retail sites operated by the marketers, jumping from N97 per liter to current N170 per liter.

The increases come in contrast the prevailing low price cycle in the global market, compelled by falling demand associated with deleterious impact of raging coronavirus pandemic on social and economic activities.

New price increase hit the domestic market Friday morning following directives from the Nigerian National Petroleum Corporation (NNPC) for coastal and ex depot prices of petrol be increased to N145 per liter and N155 per liter respectively.

The price increases at the points of market supply translates to rise from the pump price of N160 per liter to N170 per liter at the retail station operated by marketing companies whose operating margins are allowed at N12 per liter.

In a letter, PPMC/C/MKT/003, from the Marketing Manager, Mr Ali Tijani, to the Executive Director in the Commercial Department of Pipelines and Petroleum Marketing Company (PPMC), the Managing Director of the company approved recommendations that ex coastal price of petrol be increased to N130 per liter while the ex-depot price be also increased to N155 per liter.

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The approval followed proposals for PPMC November 2020 actual prices for the premium motor spirit (PMS) also called petrol with effect from November 13.

The price increase came just hours after the Chairman of Major Oil Marketers Association of Nigeria (MOMAN), Mr Tunji Oyebanji, told The Oracle Today in a private chat during a virtual conference that price fluctuations rocking the domestic market do not reflect perfect dynamics, explain that ctirical ingredients of deregulation are still expected to establish a competitive price environment.

According to him, the prevailing deregulation of the market and resulting price movements are not backed by any known law until there is a legislation that guarantees that that policy proclamations concerning changes in the market are solidified with legal instruments.

According to Mr Oyebanji, the prevailing market changes are products of policy directives rather than legislations, a satiation he argues makes investments in the environment vulnerable to uncertainties.

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He also listed other changes that are germane for the downstream industry to properly liberalize and commercially deregulate in order to enthrone the high level of competition required to address price jumps.

He argues that commercial deregulation necessarily requires that agencies and regulators that influence prices in the market, including the Petroleum Products Pricing and Regulatory Agency (PPPRA), Petroleum Equalization Fund (PEF) and other toll gates in the market be dismantled to create space for competition.

He also called for removal state monopoly operated by the Nigerian National Petroleum Corporation (NNPC) and her downstream companies in the supply of products to the domestic market. The prevailing practice where marketers rely on the ex-coastal and ex-depot prices determined by the NNPC inhibits competition since, he argues, all players are rewarded equally despite the scale of internal efficiencies.

Mr Oyebanji also pointed at the preferential allocation of import permits to certain players by the PPPRA and Department of Petroleum Resources (DPR) as regulatory interferences in market competition. He said a free and competitive market should allow all competent players equal and fair opportunity to source products from their sources of choice.

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He also decried double standards in the foreign exchange (forex) rates available to marketers in the country, lamenting that preferential treatment afforded some marketers by the Central bank of Nigeria (CBN) slants the playing field against players left to source forex from secondary windows.

 Mr Oyebanji who is also the Managing Director of 11 Plc called for uniform forex rate for all players in the domestic market in order to enable competition in the industry address pump prices and consumer protection in the market.

He called on regulators in the industry to recognize the changing global realities in demand and supply, adding that government technocrats should consult with the industry investors in evolving perfect legislation for domestic fuel market deregulation.

He called for total removal of state monopoly to enable commercial competition rule the market, insisting that government should adopt the role of enabler rather than competitor in the business environment.

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