New Petrol Regulations Seek Forex Parity Between NNPC, Marketers

Nigeria Labour Congress (NLC) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have said they are studying new regulations adopted by the Federal Government to guide importation, pricing and distribution of petrol.

The unions promised to make their positions known soon.

Under the new rules, which was submitted by the Technical Committee on Premium Motor Spirit (PMS) Pricing Framework, there is now a single forex window for all petroleum products importers into the country including the Nigerian National Petroleum Corporation (NNPC).

Also, the technical committee recommended the issuance of monthly pricing guide by the Petroleum Products Pricing Regulatory Agency (PPPRA).

The technical committee, which was inaugurated on December 14, 2020 by the Minister of Labour and Employment, Dr. Chris Ngige, is chaired by Onochie Azubuike Anyaoku.

The terms of reference of the committee include coming up with a viable framework for PMS price modulation.

Submitting the report of the committee to the Federal Government in Abuja, Anyaoku pointed out that the non-adoption of common exchange rate exposed Nigerians to possible exploitation.

He also said the operations and charges of Nigeria Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) helped to push up the price of petrol in the country.

The committee recommended that the charges of NPA and NIMASA, which are currently domiciled in dollar, should be paid in naira to ease pressure on national currency and ease operations of petrol importers.

The report stated: “Non-adoption of common exchange rate will expose Nigerians to exploitation by market participants. Universal exchange rate is the most effective way of liberalising the sector and introducing competitiveness that will ultimately lead to fair price. On lightering expense, about 70 per cent of the ship to ship happen in the Lagos area. NPA and NIMASA charges are paid in U.S. dollars. Marketers are compelled to source forex from the parallel market to pay the charges, thereby leading to higher pump price. This is responsible for the lightering expense of about N4 per litre.”

The report noted that observations were made about the beneficiaries of wholesale margin meant for the importer. The existing template dedicated the margin only to any company that delivers product. Consequently, bulk importers do not have margin at all for import activities.

The report recommends that the PPPRA should convey periodic meetings with Petroleum Products and Marketing Company (PPMC) and other importers to construct actual costs of supply reflective determination as an interim solution to the confusion in the downstream sector.

It added that the NLC and its Trade Union Congress (TUC) counterpart as well as PENGASSAN and NUPENG should witness the determination of prices at periodic meetings with other stakeholders.

The committee also mandated NNPC and all importers to make import data available to the PPPRA to facilitate informed decisions on price guide.

The report also noted that all importers, including NNPC must adopt the same forex window to ensure accurate pricing.

Accordingly, PPPRA board should adopt closest average as a basis for price determination.

PPPRA is to also ensure market rates for shuttle vessels are monitored and reflected on a monthly basis while government should enforce the immediate collection of NPA and NIMASA charges in Naira to reduce pressure on forex demands and price hike.

The technical committee also proposed a 50 per cent reduction of NPA and NIMASA charges to reduce pump price of petrol in the country.

The committee urged the Federal Government to embark on massive campaign on the benefits of deregulation and targeted communication on distinction between price fixing during regulated price regime and issuance of monthly guiding price by the PPPRA under a deregulated regime.