Nigeria’s first professor of the Capital Market and former Imo State Finance Commissioner, Prof Uche Uwaleke, on Wednesday described the hike in petrol price from N123.50k/litre to a price band of N140.80 to N143.80 as an indication that the Federal Government was ready to gradually exit the fuel subsidy regime.
The Petroleum Products Pricing and Regulatory Agency (PPPRA), in a memo to oil marketers on Wednesday, said that the upward review of petrol price stemmed from existing market realities which were taken into consideration before the new pump price was released.
Prof Uwaleke told newsmen that exiting the subsidy regime was necessary in view of plummeting government revenue and the pressure on government finances occasioned by COVID-19.
‘Fortunately for the Nigerian economy which is substantially powered by the oil sector, the OPEC+ production-cut agreement is yielding positive result, helping oil price recovery. However, this translates to a higher cost of petroleum products imports. So, until we develop the capability to refine enough crude oil for domestic consumption, the pump price of PMS will continue to be exogenously determined. This is the sad reality,’ he said.
‘Now that the government has lifted the ban on interstate travel as part of measures to restart the economy, we cannot afford any round of fuel scarcity and the attendant costs to the economy. In due course, especially post COVID-19, I expect the government to fully deregulate the downstream sector, paving way for private investments and generating a competitive environment that will drive down petroleum products prices ultimately. Only then, will the hand of the PPPRA become less visible,’ Uwaleke he stated.
PPPRA’s memo titled “Advised price for PMS for July”, dated July 1, was signed by the Executive Secretary of PPPRA, Mr Abdulkadir Saidu.
It read: ‘Please recall the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations based on the existing price regime
‘After a review of the prevailing market fundamentals in June and considering marketers’ realistic operating cost, as much as practicable, we wish to advise a new PMS pump price band of N148.80-N143.8 per litre for July 2020.
‘Kindly note that ex-depot for collection includes the statutory charges of bridging fund, marine transport average, National Transport Allowance (NTA) and the administrative charge.
‘All marketers are advised to operate within the indicative prices as advised by PPPRA.’
Oil prices inched higher Wednesday, continuing a recent rebound.
Brent crude, on which Nigeria’s oil is benchmarked, has risen up to $40.1/barrel recently, though there are fears of an imminent crash as COVID-19 pandemic increases.