Nigerian petroleum marketers warned that they would shut down filling stations across the country should the Federal Government try to enforce price controls on Premium Motor Spirit (PMS), saying that doing so would collapse the nation’s deregulated downstream petroleum market.
The warning came on the heels of pronouncements by the Minister of State for Petroleum Resources (Oil), Sen Heineken Lokpobiri, who instructed the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to protect consumers against exorbitant pricing and profiteering following the recent slide in global crude oil prices.
IPMAN, representing independent marketers, argued that Nigerian operators are not over-pricing the product as commonly assumed, citing losses they are already incurring from continuous depot price drops. “If they attempt to enforce price control, we will close our filling stations across the nation,” he warned.
He added that the government could not maintain a deregulated economy while also mandating sales prices for products procured at different costs.
According to him, numerous marketers buy fuel at exorbitant costs, and even with subsequent drop in depot prices before the products arrive their facilities, they are still compelled to sell at a loss to customers in order to keep their businesses going while servicing bank debts. He further cited dwindling patronage from consumers as adding to the financial woes of operators.
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Mr. Lokpobiri had earlier asserted that while the downstream segment is fully deregulated by the PIA, the government still has a statutory duty to curb profiteering and ensure that consumers get a fair deal.
Nigerians have anticipated a reduction in pump price, especially given the significant crash in crude oil prices due to the abatement of Middle Eastern tension. IPMAN countered, saying the country should foster real competition through incentives to boost refining and increase product importation.
It urged the government to re-invigorate state-owned refineries and to create an environment for more private investors in refining.
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This incident signifies a potential showdown between the government, anxious about public reactions to rising fuel costs and the downstream petroleum sector operators who insist on the sanctity of market forces to regulate pump prices in a deregulated regime.
