High fuel price: FG engages petroleum marketers, industry regulators

By Johnbosco Agbakwuru

The Federal Government on Monday reaffirmed its commitment to ensuring fairness in the downstream petroleum sector, saying it is engaging petroleum marketers and industry regulators to address concerns over fuel pricing and promote a more transparent pricing regime.

Fielding questions from State House correspondents after the Federal Executive Council (FEC) meeting presided over by President Bola Tinubu, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said consultations are ongoing with market operators and regulators to ensure adjustments in pump prices reflect prevailing global crude oil prices in a fair and balanced manner.

He observed that while marketers often respond swiftly to increases in global crude oil prices by raising pump prices on the basis of replacement costs, reductions in prices tend to be slower because of existing stock purchased at higher costs. According to him, the government’s objective is to strike an appropriate balance between safeguarding the commercial sustainability of operators and protecting consumers from exploitative pricing practices.

Oyedele noted that the Federal Competition and Consumer Protection Commission (FCCPC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) are already addressing the issue within the framework of the Petroleum Industry Act (PIA).

He added that fiscal measures introduced by the Tinubu administration, including the suspension of Value Added Tax (VAT), excise duty, and the surcharge on petroleum products, have helped cushion the impact of global energy price increases, keeping fuel prices lower than those in neighbouring countries.

“We’ve had a couple of meetings, including with the operators and the regulators. Generally, the way the market tends to work is that when prices are going up — like the price of crude oil — you find the operators will make the adjustment very quickly on the basis of replacement cost.

“If you were selling 1,000 litres and prices go up, and you don’t adjust immediately, if you sell at the old lower price you can’t sustain your level of activity of 1,000 litres, and that tends to make sense.

“But then when prices come down, the prices don’t go down as fast, so the excuse is always that we have unsold inventory, old stock. This is something we need to always balance.

“Of course, we do not want our operators and businesses to go out of business. We also do not want them to exploit the Nigerian people. So trying to strike that balance requires work on the part of the regulators and also ensuring that we’re very honest and transparent with ourselves.

“Some of you may have seen the FCCPC also issue public notices on fuel prices.

“We have the NMDPRA — the Nigeria Midstream and Downstream Petroleum Regulatory Authority — which has the mandate under the Petroleum Industry Act to ensure that prices, while being market-reflective, do not take advantage of the Nigerian people.

“The long and short of it is there’s already an ongoing process to address this issue.”

He also urged transport operators benefiting from the Federal Government’s investments in the Presidential Compressed Natural Gas (CNG) Initiative — including subsidised vehicle conversion kits — to pass the resulting cost savings on to commuters by offering more affordable fares rather than maintaining petrol-based pricing.

Responding to the suggestion that Nigerians are not feeling the effect of government measures to ameliorate the impact of fuel subsidy removal, the minister disagreed.

“I will not agree that it is not working. I’ll say maybe we want it to work even more. The reason I say that is many people have said that when the crisis in Iran started, many countries reduced taxes on fuel prices. What is Nigeria doing?

“And I said, well, actually, in Nigeria there are no taxes on fuel prices. We suspended them. Mr. President suspended VAT, excise duty, as well as the surcharge on fuel products. This is the main reason why you find that the pump prices of fuel products in our neighbouring countries are between 20 and 50 percent lower than they are in Nigeria.

“So, it would have been worse. Let’s say it’s a bad situation that we are paying more for transportation, but it would have been worse without those interventions by the government.

“The other issue I want to mention is an appeal to us as citizens. With this huge investment, for example, in CNG conversion kits — some of which are subsidised by government — you find a person using CNG charging the same amount as the person using petrol.

“That is not the government’s fault; it’s people taking advantage of the situation. If we all play our part and are honest and think about the interest of our country, I think we’ll make progress faster.”

The post High fuel price: FG engages petroleum marketers, industry regulators appeared first on Vanguard News.