The Nigerian Midstream and Downstream Petroleum Regulatory Authority has identified crude oil sourcing, single-source domestic refining, logistics and transportation costs among factors driving volatility in fuel pump prices.
Head of Public Affairs, NMDPRA, Mr George Ene-Ita, made this known in an interview with the News Agency of Nigeria in Abuja on Sunday.
Ene-Ita described the issues surrounding continuous fuel price increases as knotty, adding that fuel prices had been completely deregulated and were, therefore, subject to market volatility.
He said the sourcing of crude oil as feedstock and the time lag between crude procurement and arrival at refineries were factored into product pricing.
According to him, marine and inland taxes associated with the movement and supply of petroleum products were also factored into the pricing.
“This issue is knotty in the sense that there are various factors involved.
“Pump price of petrol has been completely deregulated. And if this is the case, it also means that all volatilities associated with supply have to be factored in.
“These factors include single-source domestic refining, sourcing of crude oil as feedstock, time lag between when crude is sourced offshore and when it eventually arrives at the refinery.
“They also include time lag between when PMS cargoes are ordered and when they eventually arrive our ports for subsequent inland distribution and supply in the case of imported fuel.
“There are also transportation and landing costs, as well as marine and inland taxes.
“Perhaps when the domestic refining ecosystem becomes more robust, competitive and sustainable, the issues regarding pricing will become clearer and more beneficial to consumers,” he said.
Ene-Ita said refinery pricing templates and ex-depot prices were not regulated under the current framework.
He, however, said NMDPRA was collaborating with stakeholders and agencies such as the Federal Competition and Consumer Protection Commission to ensure price equilibrium and parity at the last mile.
NAN reports that the current market price for Brent crude oil is $96.28 per barrel, driven by the ongoing geopolitical conflict and tensions in the Middle East.
The pump price of fuel currently ranges between N1,299 and N1,350 in the FCT, following an upward adjustment in the gantry (ex-depot) price by the Dangote Refinery, which ranges between N1,265 and N1,290 per litre.
Motorists and consumers have expressed concern over the continued rise in fuel pump prices, saying it has worsened hardship, inflation and the high cost of living.
Reacting to this, the Independent Petroleum Marketers Association of Nigeria urged the Federal Government to intervene in crude oil pricing for domestic refining to moderate fuel prices and ease pressure on consumers.
IPMAN President, Maigandi Garima, told NAN that the current international crude oil market posed challenges to domestic petrol pricing because refiners had to procure crude at prevailing market prices.
Garima said higher crude oil prices translated into higher production costs for refiners, who would subsequently pass the additional cost to the market.
He called for government intervention to reduce the cost of crude supplied to domestic refineries during periods of international market volatility.
According to him, such intervention should not be interpreted as a return to fuel subsidy, but as a temporary measure to support domestic refining and reduce pressure on consumers.
“What we are saying is that if Nigerians can make this huge investment, we should support them. Government can intervene by reducing the cost of crude oil to the refinery.
“When the refinery refines the product at a lower cost, it can also reduce the price for Nigerians, and this will help the economy,” he said.
Garima also called for a more predictable crude oil pricing arrangement for domestic refineries, saying frequent fluctuations made it difficult to sustain stable fuel prices.
He urged the government and relevant stakeholders to explore mechanisms that would provide a more stable crude supply and pricing framework for domestic refining.
He said such an arrangement would enable domestic refineries to plan better and potentially provide more stable prices for petroleum products.
(NAN)
