Despite the condemnation that greeted recent hike in pump price of premium motor spirit, known better as petrol, oil industry experts and marketers have insisted that the Federal Government’s decision to deregulate the sector and remove susbsidy regime was best for the country as against clamour to retain status quo.
They, among others, argued that the deregulation would ultimately favour consumers and the country’s economy as soon as the industry stabilizes and prices begin a downward trend, adding that the current era of flunctuating petrol price was best for the industry as such would save government from burden and uneccessary cost being channelled to subsidise petroleum.
As stated, the prevailing cost-reflective price of N160 per litre of petrol was a resultant effect of the apex government’s bold decision to abolish subsidy regime and enthrone downstream deregulation era, adding that Nigerians would in near future appreciate the initiative after petrol price had been forced down with more fund available for other infrastructural projects.
Stakeholders who spoke on the issue across the country were unanimous in their views that the decision to allow market forces determine the price of petrol was not only healthy for the downstream sector but was good for the Nigerian economy which has sacrificed so much to shoulder the now defunct burdensome subsidy system.
Speaking, Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Adetunji Oyebanji, said that the government’s decision allowing the market to determine prices would prevent the return of subsidies and that such would enable operators the opportunity to recover their costs.
This, he maintained, would in the long run, encourage investment and create jobs for Nigerians and reduce the unemployment statistics across the country.
He explained that though the pum prices would need to be adjusted to reflect realities of the increase of ex-depot prices by the Petroleum Product Marketing Company (PPMC), the magnitude of the increase, timing and location would be determined by each individual company.
“Consistent with global best practices, MOMAN does not dictate prices to its members as this would be anti-competition in a fully deregulated market,” Oyebanji said.
The MOMAN chairman, however, called on the Ministry of Petroleum Resources to intensify its public awareness drive to educate the populace on the current realities and ensure the citizens understand that government action was not intended to foist hardship in the country.
“The Ministry of Petroleum Resources should also be telling Nigerians that we can no longer afford subsidy. If we keep it, the investment in infrastructure, health, education, etc., will not be possible. We are borrowing so much to finance our budget. We spent over a trillion naira on subsidy last year. It is unsustainable’’, he said.
On his part, a Director at NIPCO Plc and Chairman of SY Petroleum Limited, Sani Yau, explained that the price increase was reflective of trending realities in the sector, noting that deregulation will foster an eventual price reduction in the nearest future when other market fundamentals would converge to create the desired competitive market space.
Also speaking, a stakeholder in the sector and an independent marketer, John Agidigan, explained that before the increase, market forces had forced the price per litre down to N121, then up to N131 and later N148.
He explained that under a deregulated environment, prices are expected to rise and fall in response to the volatility of demand and supply.
According to him, the new deregulated regime would always ensure the availability of the product in the market at affordable price based on the supply, adding that this regime was better than what obtained in the past when Nigerians had to contend with extreme scarcity and its attendant challenges such as long queues at fuel stations.
Another stakeholder in the downstream sector, Aggrey Koleijo, said Nigerians must consider the benefits of the new pricing regime rather than just reacting to the price increase which could be reversed the moment market forces dictate otherwise.
He stated that the same market forces that brought about price reduction not long ago were still responsible for the hike and can still ensure a reduction, depending on the demand and supply activities within the industry.
Also, an oil analyst, Dr Mac Udiewe, said the price of fuel would surely go down in a few months’ time when supply of the product would increase geometrically with the entrance of products from private refineries such as the Dangote Refinery and other modular refineries.