Matters Arising From Petroleum Minister’s Press Statement (11/5/16).
5 years ago
“Following a detailed presentation by the Honorable Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action now open to the government is to take the following decisions: 1. In order to increase and stabilise the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by Regulatory Agencies”.Minister of State For Petroleum, Wednesday, 11/5/16. Good news that every qualified Nigerian business concern can now import petroleum products. This is a sort of deregulation. Hoping that forces of demand and supply ,will take effect here, such that there would availability of petroleum products. Let there be competition amongst importers, which will be to the best interest of the consumer. It would be interesting to know the guidelines by the regulatory agencies.
2. “All Oil Marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product. Pursuant to this, PPPRA has informed me that it will be announcing a new price band effective today, 11th May, 2016 and that the new price for PMS will not be above N145 per litre”.Minister of State For Petroleum, Wednesday, 11/5/16. From all indications, the secondary sources here will likely be the black market. This would more likely drive the prices of petroleum products higher. Inflation would likely increase. Low income earners and unemployed Nigerians would greatly be affected. However, the government can cushion the effects of these, may be by granting import duty free to petroleum importers etc.
It would be difficult for PPPRA to regulate petroleum prices, if importers should source their foreign exchange from the black markets. More detailed analysis will become available when the regulatory guidelines/PPPRA template are made known.