May 26, 2024

Petrol hike: MOMAN warns FG against unfair FX access, anti-competitive environment for some petrol importers 

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… says creating advantages for some petrol importers will potentially impact fair competition, hinders efficiency, pump prices

Oredola Adeola

 

The Major Oil Marketers Association of Nigeria (MOMAN) has cautioned the Nigerian Government and regulatory authorities against creating unfair foreign exchange(FX) access to some importers for the importation of  Premium Motor Spirit (petrol), insisting that an anti-competitive environment could give some marketers an advantage over others, thereby preventing operators from ensuring efficiency and selling petroleum products at competitive prices to customers.

 

MOMAN emphasised that the authorities must comply with the provisions of the Petroleum Industry Act, which ensure that no one player has an unfair advantage.

 

It said that if marketers are undertaking the financial risk of importing petrol, measures must be in place, in line with the provisions of the PIA.

 

The major oil marketers made this revelation in an official statement obtained by EnergyDay on Wednesday.

 

MOMAN however revealed that the largest components of the cost build-up for Premium Motor Spirit (PMS) are the international price of crude oil and the exchange rate, accounting for over 80% of the cost, while statutory dues, distribution costs, and margins make up the remaining 20%.

 

While commending the Nigerian Government and its authorities for their urgent efforts in opening the downstream sector and petroleum products market, which allows various players to import petroleum products into the country, MOMAN therefore cautioned that the market liberalization and the commitment to a level playing field should enhance operators’ efficiency, enabling them to offer competitive pricing choices to the public.

 

The Marketers said, “Some operators have successfully imported PMS into the country, marking the first practical step towards a liberalized market. However, the major challenges still lie in accessing foreign exchange for imports and ensuring a level playing field regarding pump prices.

 

“A level playing field in accessing foreign exchange for imports would enhance operators’ efficiency, enabling them to offer competitive pricing choices to the public, “MOMAN said.

 

The major marketers further highlighted three key areas for the success of a program aimed at combating the financial impact of subsidy removal and minimizing the burden on households.

 

These areas, according to MOMAN, include effective and sustainable implementation of subsidy removal gains.

 

It said, ” The gains from subsidy removal should be invested in promised palliatives such as subsidized transportation, social investment programs for healthcare, education, and infrastructure development. MOMAN emphasizes the importance of rolling out these initiatives in a visible, transparent, and timely manner.

 

MOMAN said that the other is focused and sustained increase in national crude oil production, suggesting that increasing the national production of crude oil from the current 1.2 million barrels per day to closer to 2 million barrels per day. This increase would bring in much-needed foreign exchange.

 

The third according to the association is the ongoing engagement and accountability to Nigerians. MOMAN believed that transparency and engagement are essential for building public trust and understanding.

 

 

Continued communication and accountability to the public regarding the implementation of subsidy removal gains and increased crude oil production are crucial.

 

MOMAN therefore acknowledged that downstream deregulation has led to structural changes and increased costs for consumers.

 

It said, “To address this, they offer pragmatic advice to Nigerians, suggesting that households consider switching from Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO) to gas or solar power. They also encourage the use of Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG) for intercity buses, tricycles, minibuses, and taxis.”

 

Furthermore, MOMAN emphasizes the need for exploring and deploying different energy options to develop a sustainable, affordable, and long-term energy mix for powering homes, businesses, and mobility.

 

MOMAN therefore said that it remains committed to fostering transparency, competitiveness, and best practices in the Nigerian downstream petroleum sector.