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.
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.
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.
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.”
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.
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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