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Only full deregulation will drive down petrol price, says MOMAN


Offshore oil platform

Offshore oil platform

Importers of petroleum products have called on the Federal Government to fully deregulate the downstream sector to enable more investments, which is expected to push down the current price of Premium Motor Spirit (PMS).

The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, who made this call on Tuesday in Lagos, emphasised the fact that the government has not fully deregulate the downstream sector, but only succeeded in adjusting the pump price upward.

According to him, market forces like issues of accessing forex, fluctuation in crude oil prices and rising importation cost should be allowed to determine the cost of petrol as obtained in a truly deregulated sector, adding that this would engender competition among marketers. “Foreign exchange is a challenge; there is no doubt about that. But people will import. It is their business, and they won’t want their business to collapse,” he added.

Although Olawore commended the Federal Government for partially deregulating the downstream segment of the oil industry, but maintained that marketers would prefer a fully deregulated sector.

He noted that the current petrol price regime was a sign that the sector might be fully deregulated in the near future. “What has happened is price adjustment, which they called appropriate pricing. What we have now is a step towards deregulation. Deregulation is actually the end point; we are in the process and we will get there. When we get to deregulation, you will have the refining process included. As it is now, we are looking at only the petrol import side.

“So, when we get to the point where everybody has the product as we are doing now, those who want to quickly turn their tanks round will choose the price they want to sell. I am very confident that in spite of the unfavourable exchange rate, we will get to the point where prices will be moving up and down.”

The MOMAN secretary stated that Nigeria’s oil industry was deregulated in the past, noting that during the period, dealers were made to buy crude, take it to the refineries and pay refining fees. “Once that happens, you take your refined products and then you look at your own cost, not the other person’s cost, and you fix a price. That was why you could get a price in Lagos that was different from the one in Ibadan, and that of Ibadan was different from Port Harcourt.”

He disclosed that many marketers were already considering investing in the downstream sector due to the new price regime.

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