The Petroleum Products Pricing Regulatory Agency (PPPRA) says full deregulation of the downstream oil and gas sector will help force down the price of Premium Motor Spirit (PMS) otherwise called petrol.
In a statement signed by its Executive Secretary, Mr Saidu Abdulkadir in Abuja, on Sunday, PPPRA attributed the rise in the pump price of the commodity to cost of petroleum products in the international market and the cost of acquiring foreign exchange (FOREX).
Abdulkadir explained that the newly-adopted market-based pricing system was in view of the need to promote the growth of the Nigerian petroleum industry and the economy in general.
He said that oil marketing companies had resumed fuel importation and had directly imported a total of 536,000 metric tonnes of PMS into the country.
According to him, additional investment in local refining, will engender competition and force down prices of products.
The agency is cognizant of the public outcry trailing the recent surge in petroleum products prices.
“However, this decision is a reflection of the new market-based pricing system, which does not seek to harm consumers but foster growth in the sector and prevent wastages resulting from the subsidy.
“The recent upward movement in pump price is becoming a bone of contention because of the fragile state of the economy.
“However, deregulation of the sector is in the country’s best interest because competition has a way of forcing down prices and ensuring that companies place a tight rein on production cost such that wastes that could be passed on to consumers in form of high prices are eliminated.
“The trillions of naira that would have been spent subsidising PMS could be injected into other key sectors such as agriculture, education, health, power and infrastructure.
“There will also be a focus on the provision of social safety nets for the poor who bear the brunt of the COVID-19 pandemic,” he said.
Abdulkadir said that under the market-based pricing regime, products prices would be determined by market forces.
He said that this explained the recent downward and upward movements in the guiding pump price band of PMS, which reflected market realities.
The agency had announced the July pump price of petrol to be between N140.80 and N143.80 per litre from N121.50 per litre for the month of May 2020.