In the ongoing transition towards a deregulated market structure for Premium Motor Spirit (PMS), the federal government has authorised petroleum marketers to source PMS directly from local refineries.
PulseNets learnt that this development was disclosed on Friday via a statement signed by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, and published on the ministry’s official X page.
FEDERAL MINISTRY OF FINANCE ABUJA
PRESS STATEMENT
UPDATE ON DIRECT PURCHASE OF PMS BY PETROLEUM PRODUCT MARKETERS
Following the directive of the Federal Executive Council (FEC) and the implementation of the new Naira-based sales mechanism, the Implementation Committee on the… pic.twitter.com/sTg7oI8xWf
— Federal Ministry of Finance (@FinMinNigeria) October 11, 2024
This shift to direct purchases signifies a break from the previous model where the Nigerian National Petroleum Corporation Limited (NNPCL) served as the sole buyer and distributor of PMS from the refineries. By enabling marketers to negotiate commercial terms directly with refineries, the government aims to foster a more competitive market landscape and streamline the supply chain for petroleum products.
“Local Production of PMS: With the commencement of local PMS production, the market is better equipped to support these direct transactions. This transition is expected to enhance efficiency in product availability and stabilise market conditions for the benefit of all Nigerians,” the statement noted.
Promoted as a strategy to improve PMS availability and stabilise market conditions, the question arises: how will this influence the ongoing fuel price hike?
An energy consultant, who spoke to PulseNets on condition of anonymity, explained that fuel prices are driven by multiple factors, unrelated to loading from refineries or direct purchases. According to her, in addition to the intricacies of petrol production, fuel prices—including those for petrol, diesel, and other products—are strongly tied to international market rates.
Claims have surfaced that the NNPC, in its role as the sole buyer and distributor of PMS, added costs before delivering the fuel to retailers. However, the energy consultant pointed out that deregulation would eliminate the NNPC as the middleman.
“By the complete deregulation, anybody can go and buy from Dangote. Anybody can import, and anybody can sell at the price they wish to sell. Until that happens, we will not know what will happen to prices, whether they will go higher or lower, but most likely, this will have no effect because prices of fuel are not determined by who is giving it to you but by market prices,” she told PulseNets.
Meanwhile, Bala Zakka, a public affairs expert and oil and gas analyst, voiced strong disapproval of the deregulation policy. Speaking to PulseNets, he condemned the country’s leadership, describing them as “morally bankrupt” and accused them of driving Nigeria toward economic ruin. He also criticised the policy’s supporters for misunderstanding the nature of deregulation.
“The kind of leaders we have today in Nigeria are morally bankrupt and are suffering from moral insolvency. If we continue with these kinds of leaders, they will lead Nigeria’s economy to economic Golgotha,” Zakka stated. “They don’t even know the meaning of subsidy. They have politicised it. They are only talking about petrol. They are not even bothered about what happens to those who use kerosene and diesel, which is crippling everything about strategic industrial, commercial, and domestic sectors.
“The fake economic praise singers who supported deregulation cannot differentiate it from privatisation and commercialisation,” he added.
Also Read: “Fuel scarcity will last for 2 more weeks” — Petroleum marketers reveal
On Thursday, the Concerned Energy Consumers in Nigeria (CECIN) advocated for the full deregulation of the petroleum sector. PulseNets reported that the group believes full deregulation would attract more foreign investment, end the shortage of refined petroleum products, and curb the smuggling of petroleum products to neighbouring countries.
The group also claimed it would safeguard consumer rights, dismantle monopolies, and establish fair pricing regulations.
