There could be a further increase in the retail pump price of petroleum products like petrol, kerosene and diesel.
This is due to the Federal Government’s proposal of the addition of the cost of managing the national strategic stocks of petroleum products to the retail price of the commodities.
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According to a report from Vanguard, this proposal is contained in the 2020 Petroleum Industry Bill (PIB) which is currently before the National Assembly for passage.
This means that the passage and subsequent signing into law of the PIB, will lead to further increase in the pump price of petrol. Other things being equal, as the cost of managing the national strategic fuel stocks would, from then, form an integral component of the pricing template of petroleum products and would determine the pump price of the commodities.
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Other current components of the pricing template, apart from the landing cost include the National Transportation Average (NTA), the Nigeria Ports Authority (NPA) charges, marketers margin and transportation costs.
In the new PIB that is before the National Assembly, the new Nigerian Midstream and Downstream Petroleum Regulatory Authority that would emerge from the scrapping of the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF), is to be saddled with the responsibility of setting up and managing the national strategic stocks of petroleum products.
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The new agency would determine the amount to be charged as a levy for financing the strategic petroleum products’ reserves. Which would form part of the retail price of each of the petroleum products, and also mandate to work with security agencies in deciding areas of the country where the national strategic stocks would be maintained and distributed. The 2020 PIB partly reads;
- “The Authority shall: establish, administer and ensure the storage and distribution of the national strategic stocks of petroleum products in accordance with regulations issued by the Authority.
- Determine and publish the amount to be charged as a levy for the financing of the national strategic stock, which shall form part of the retail price of each petroleum product, such levy to be determined as a percentage of the retail price and be deducted on a wholesale basis.
- And designate, in consultation with the appropriate authorities and national security agencies, the strategic locations across the country where the national strategic stocks shall be distributed and maintained.”
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The PIB is also proposing that facilities and infrastructure which are to be specifically defined by the soon-to-be-established Nigerian Midstream and Downstream Petroleum Regulatory Authority for the storage of national strategic stocks would be exempted from the provisions of the law relating to open access.
The other functions of the Nigerian Midstream and Downstream Petroleum Regulatory Authority in the new PIB include; regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria, and determining appropriate tariff methodology for processing of natural gas, transportation and transmission of natural gas, transportation of crude oil, and bulk storage of crude oil and natural gas.
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What this means:
This is going to add more financial burden to Nigerians who are already complaining of the high cost of petroleum products, which has negatively impacted on the price of goods and services.
It can be recalled that the Federal Government had some time ago proposed a new charge on petroleum products for road maintenance across the country. This was roundly condemned by Nigerians and some stakeholders before the idea was later suspended.
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