Page 5 - AfrOil Week 11 2021

AfrOil COMMENTARY AfrOil

At the same time, local press sources have been in this month’s prices are as a consequence of the
reporting that wholesalers and depot owners average landed cost of imported super petrol
in Lagos, Abuja and other cities were stockpil- [gasoline] increasing by 14.97% from $391.24
ing fuel in the expectation that the government per cubic metre in January 2021 to $449.82 per
would raise prices. cubic metre in February 2021, diesel increasing
Even so, most Nigerian filling station oper- by 21% and kerosene increasing by 13.26%.”
ators were not anticipating any major changes Despite Bargoria’s explanation, the price hike
to the official pricing regime in the near future. has sparked the ire of some observers in Kenya.
After all, state-owned Nigerian National Petro- One newspaper, The Nation, published an arti-
leum Corp. (NNPC) pledged publicly on March cle predicting that the new pricing schedule was
1 that it would not push costs above NGN200 likely to be particularly burdensome for Kenyan
per litre ($0.52) in the month of March. consumers because of previous government
On that date, NNPC, which regulates the decisions raising the rate of taxes that account
country’s fuel markets and also has a monopoly for a portion of fuel costs. “[The] biggest bene-
on petroleum product imports, said in a state- ficiary of any fuel price increases is the taxman,
ment that it “was not contemplating any raise in given that higher pump prices result in higher
the price of petrol [gasoline] in March in order taxes,” it wrote. “This makes the government,
not to jeopardise ongoing engagements with which is running on empty, the ultimate benefi-
organised labour and other stakeholders on an ciary of the fuel price hike.” Nigeria may be
acceptable framework that will not expose the Meanwhile, one Kenyan political party –
ordinary Nigerian to any hardship.” The state- the centre-left Orange Democratic Movement heading for a
ment quoted Kennie Obateru, the group gen- (ODM) – has described the rate hike as punitive
eral manager of NNPC’s public affairs division, and unsupportable. Edwin Sifuna, the faction’s bureaucratic
as saying specifically that there would be no secretary general, described EPRA’s decision as clash between
increases in ex-depot prices for gasoline. “shocking.” Costly fuel will be a burden for Ken-
Nevertheless, the price hike was rolled out on yan consumers, who are already in a tough eco- PPPRA and NNPC,
March 11. The very next day, NNPC published nomic position because the global coronavirus
a statement reiterating its pledge not to raise (COVID-19) pandemic is ongoing and because but the PIB
fuel costs in March. And later on March 12, the fuel prices have already gone up repeatedly since
Major Oil Marketers Association of Nigeria the beginning of the year, he declared. may render the
(MOMAN) and the Independent Petroleum “The pandemic has been a tragedy for the dispute irrelevant
Marketers Association of Nigeria (IPMAN) said already heavily taxed population. Central to this
they had received confirmation from NNPC tragedy has been the cost of energy, which has an
that prices were not slated to go up. impact on every facet of our lives ... [We] can’t
Clement Isong, MOMAN’s executive sec- see the moral ground on which to levy more
retary, told the Nigerian press that he expected taxes on a population itself on its knees from the
the state-owned company’s reassurances to set- same,” Sifuna commented.
tle concerns about possible supply shortages.
“What NNPC did was to take out the specu- Different implications
lation by giving assurance that [the gasoline] These complaints do not seem to have had much
price will not go up in March, and that killed the impact in Kenya. As of press time, EPRA had not
queue and demand went down,” he was quoted walked back its statement, and no other govern-
as saying by NAN. “What they have done again ment body had gainsaid its decision to raise
this morning is to take out the speculation out of petroleum product prices. It seems reasonable
the market. They always have enough products.” to assume, then, that there are no major changes
As of press time, it was not clear whether in store for fuel pricing policy and procedures
Nigeria’s federal government had weighed in in Kenya.
on the matter. Even so, NNPC seems to have Nigeria, by contrast, may be heading for a
won the day. It responded swiftly and harshly bureaucratic clash between PPPRA and NNPC.
to reports that some filling stations had raised These two entities are both controlled by the
their retail prices into the new range announced federal government, and they seem to disagree
by PPPRA, conducting a round of inspections on the question of which has the final word on
to ensure that gasoline was still being sold at pricing changes.
NGN162-165 ($0.426-0.434) per litre. As noted above, NNPC appears to have come
out ahead of PPPRA for the time being. But in
EPRA announcement the long run, the outcome of the dispute may
In Kenya, meanwhile, the Energy and Petroleum be irrelevant. Nigeria’s government is hoping to
Regulatory Authority (EPRA) issued a state- secure passage for a new oil and gas law, known
ment on March 14 announcing its plan to push as the Petroleum Industry Bill (PIB) next month,
prices for gasoline, diesel and kerosene up by and this legislation is designed to strip NNPC
KES7.63 ($0.07), KES5.75 ($0.052) and KES5.41 of its regulatory function and eliminate PPPRA.
($0.049) per litre respectively. It would fold the latter into a new agency – the
EPRA justified its decision, which took effect Nigerian Midstream and Downstream Petro-
on March 15, by pointing to the rising cost of leum Regulatory Authority (NMDPRA) –
imported petroleum products. In its statement, which will monitor commercial, operational
it quoted the agency’s acting director-general and technical operations in the downstream
Daniel Kiptoo Bargoria as saying: “The changes sector and the midstream sector. ™

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