Nigeria deregulates downstream sector, increases petrol price

chris white flickrAs part of the new policy, the government subsidy on petrol has been removed. (Image Source: chris white/Flickr)The Nigerian government has announced a full deregulation of its downstream sector, raising the price of petrol to US$0.73 per litre

The new policy aims to increase the supply of fuel in the country. “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,” said the minister of state for petroleum Ibe Kachikwu.

The announcement was made by Kachikwu after a meeting with top government officials in Abuja on Wednesday. Stakeholders present at the meeting noted that the primary cause of fuel scarcity in Nigeria was the inability of petroleum products importers to source foreign exchange at the official rate due to the decline of foreign exchange earnings of the federal government. This has prevented private oil marketers from meeting their 50 per cent portion of the total national supply of premium motor spirit (PMS).

Under the new policy, all oil marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly petroleum products pricing regulatory agency (PPPRA) template will reflect this in the pricing of the product. The government has removed the subsidy for petrol and the PPPRA has announced the new price as US$0.73 per litre, up from US$0.43.

According to the statement, the new policy will lead to improved fuel supply in the country and drive competition, eventually bringing down prices. Apart from this, it is also expected create increased product availability and encourage investments in the downstream sector.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

twn Are you sure that you want to switch to desktop version?