Page 4 - AfrOil Week 23

AfrOil COMMENTARY AfrOil

Abuja is taking advantage of lower oil prices to eliminate a subsidy that has remained in place for decades (Photo: TheGuardian.ng)

Nigeria pushes ahead with

deregulating fuel industry

The Petroleum Products Pricing Regulatory Agency says gasoline prices will now follow the market

NIGERIA’S government on June 4 removed a properly and compete with imports, and have
cap on gasoline pump prices, as it pushes ahead been shut down. To meet its needs, the country
WHAT: with deregulation of its fuel industry. The move therefore depends on supplies from overseas,
Nigeria has lifted a cap is aimed at encouraging private companies to as well fuel produced at illegal refineries in the
on gasoline pump prices, import and sell gasoline, helping to boost the Niger Delta that process crude stolen from oil
ending a subsidy that has country’s supply security. company pipelines.
lasted for decades. In a statement, Nigeria’s Petroleum Products The previous cap on gasoline prices dis-
Pricing Regulatory Agency (PPPRA) said that couraged legitimate private firms from getting
W H Y: from now on, gasoline prices would now be gov- involved in fuel supply, leading to state-owned
The move aims to en- erned by market forces. Nigerian National Petroleum Corp. (NNPC)
courage private firms to “The price cap per litre in respect to premium dominating the market. But when international
import and sell gasoline motor spirit (PMS) is removed from the com- fuel prices were high, this resulted in the com-
and remove a financial mencement of these regulations,” the agency pany incurring hefty losses.
burden from the state. said. “From the commencement of these regu- Nigeria is now taking advantage of the col-
lations, a market-based pricing regime for pre- lapse in oil prices to usher in a policy it has been
WHAT NEX T: mium motor spirit (PMS) shall take effect. The trying to introduce for decades – an end to fuel
The government could agency shall monitor market trends and advice subsidies. The move will help ease the govern-
backtrack on reforms as the NNPC and oil marketing companies on the ment’s financial strain, saving it at least $2bn per
international fuel prices monthly guiding market-based price.” year, at a time when Nigeria is struggling to cope
rise. But an IMF deal Nigeria is Africa’s biggest oil producer, but with the coronavirus (COVID-19) pandemic
might lock in progress. its main refineries are too outdated to operate and a slump in oil revenues.

P4 www. NEWSBASE .com Week 23 10•June•2020