The National Petroleum Authority (NPA) has clarified that the price floors it plans to set will not include the margins of the Petroleum Service Providers (PSPs).
This announcement comes in the wake of the proposed implementation of the revised petroleum pricing guidelines.
The Africa Centre for Energy Policy (ACEP) had previously urged Oil Marketing Companies (OMCs) and Bulk Oil Import, Distribution, and Export Companies (BIDECs) to legally challenge the NPA over the impending implementation of the revised petroleum pricing guidelines.
The updated pricing guidelines, among other things, establish a price floor for petroleum products. This means OMCs and Liquefied Petroleum Gas (LPG) firms cannot price their products below this floor, a decision that has sparked opposition from industry stakeholders.
The energy think-tank argues that this move by the NPA signifies a worsening of regulatory failure to adequately safeguard the consumer and the industry and has resulted in the market being flooded with illicit and substandard products, tax revenue theft by some OMCs, burdensome passthrough levies and charges to the consumer, and anti-competitive behaviour.
On Monday, April 8, the NPA issued a statement saying that PSPs are free to determine their margins as they currently do and as is anticipated under the price deregulation policy.
“Variations in prices result from the freedom PSPs have been given to independently set their margins under the price deregulation policy. The amended pricing guidelines does not prevent the PSPs from doing this, hence, the competition that exists amongst PSPs will continue.”
“The Authority shall publish the price floors prior to the start of each pricing window for the information of the public for ease of reference,” it stated.
The NPA underscored that it has already implemented measures such as the Petroleum Product Marking Scheme (PPMS), Electronic Cargo Tracking System (ECTS), Fuel Monitoring System, among others to tackle other industry issues highlighted by ACEP, including the influx of illicit products through both approved and unapproved routes, tax evasion, and more.
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