The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery’, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in oil prices.
The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the crash in oil prices.
The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.
He said full deregulation of the downstream sector might push an accelerated switching to Compressed Natural Gas and Liquefied Petroleum Gas, subject to global energy prices trend in the near term.
According to him, the Petroleum Industry Act presents a unique opportunity for investments across the value chain.
The Executive Secretary/Chief Executive Officer, Major Oil Marketers Association of Nigeria, Mr Clement Isong, said with the Nigerian downstream sector headed for major changes, the regulator must strive to provide a level playing field, guard against the negative effect of a monopoly and encourage inflows from private sector investments.
He said, “The implementation of the PIA is now more critical than the law itself. Petroleum products pricing needs to be right. Eliminate pricing distortions and create a competitive market for the sale and distribution of petroleum products and natural gas.
“Price competition will over time lead to innovation which should reduce logistics and distribution costs. The pricing strategy needs to take into consideration freight, landing costs, jetty throughput charges, storage costs, etc.”
Source : PUNCH
