More fuel marketers are to be issued licenses to import petroleum products, as the Nigerian National Petroleum Company Limited (NNPCL) has agreed to scale down its control of the fuel import market to 40 percent.
For several years, the NNPC remained the sole importer of petroleum products as well as supplier of last resort, to the exclusion of other marketers, as it was the only player in the petroleum industry that could access foreign exchange at the Central Bank of Nigeria (CBN) approved rate.
But addressing journalists in Abuja on Wednesday at the end of the meeting with fuel marketers, the Chief Executive Officer of the Nigerian Midstream/Downstream Petroleum Pricing Regulatory Authority (NMDPRA), Farouk Ahmed, said the process was already on course for more licenses to be issued to qualified fuel marketers to join in the importation programme.
The meeting was attended by representatives of the Major Oil Marketing Association of Nigeria (MOMAN), Independent Petroleum Products Marketing Association of Nigeria (IPMAN), Depot and Petroleum Products Marketing Association of Nigeria (DAPPMAN), and the NNPCL,
Ahmed said the recent pronouncement by President Bola Tinubu that fuel subsidy payment was removed from the petroleum products pricing template meant the deregulation policy in the downstream sector of the petroleum industry had commenced.
The removal of fuel subsidy, he said, broke NNPC’s monopoly as the sole importer of petroleum products in the country, and threw open the market for participation by other fuel marketers.
Apart from about three fuel marketing companies that have already confirmed their plans to bring into the country consignments of petroleum products by July, he said the NMDPRA was also fast-tracking the process to issue more licenses to other marketers to join in the importation programme.
“The market is open already. We are following the regulations to roll out the policies that are very user-friendly. Some marketers have already started putting their applications for import licenses in place because we don’t want to create a supply gap.
“As the NNPC is down in importation, we have to close that gap NNPC is creating so that we do not have a shortage of supply in the country. We are processing import licenses. We are fast-tracking the process of issuing other marketers licenses to import petroleum products,” he said.
Although the NNPC as a responsible organization would monitor supplies, he said the company has agreed to continue importation of petroleum products until sufficient national stock has been built from the involvement of other importers.
He said the NMDPRA has received assurances from the NNPC that the fuel market was already well supplied and that there was no gap in the importation of petroleum products.
With the removal of subsidy on petrol, the Authority Chief Executive said it was imperative that the fuel market must be opened up for other interested players to join in importing products so long as they satisfied the requirements and regulations spelled out in the Petroleum Industry Act (PIA).
To create the space for other marketers to join, as well as make it easy for them to import easily, Ahmed said the NNPC was scaling down its importation from being the sole importer to bringing in only about 30-40% maximum of the total fuel import volume.
He said this was in line with the provisions of the Federal Competition and Consumer Protection Commission (FCCPC) regulation, which forbids any player from controlling in excess of 40% of the market share.
On foreign exchange, the ACE said since the market was deregulated, it was not necessary to consider subsidizing the rates, as every player would henceforth be accessing foreign exchange at the official rate in the market.
He said the current price of petrol announced by the NNPC was based on the exchange rate of about N650 to the dollar, adding that as the value of the Naira continues to improve, the retail price of petrol would be impacted.
The meeting also reviewed the current situation in the downstream sector relating to the pronouncement by the president on removing petroleum subsidy on premium motor spirit (PMS), popularly called petrol.
Ahmed said the meeting was convened to enable the agency engage with the marketers as well as use the opportunity to roll out the policies, in terms of the requirements for the importation of PMS.
Besides, he said the meeting was necessary to enable participants identify areas of concern while clarifying issues regarding the way forward, particularly on the conduct of the business of importation of PMS by the marketers.
“We deliberated on some concerns in terms of the provision of foreign exchange for the marketers to import. We also discuss the issue of quality of products importation, source, and locations. We deliberated on how to control and ensure that all the products imported into the country or distributed locally meet the requirements so that the consumer is not negatively affected.
“We also discussed our collaboration with law enforcement agencies, especially regarding the movement of products across the country. We also discussed pricing and agreed that as much as the market is deregulated and there is no price capping by NMDPRA, we will take responsibility by ensuring that the prices would be reflective of the market.
“We also agreed that a small team be put together to look at some critical aspects of the PIA that warrants only those with a refinery, or those with international trade experience, are allowed to import,” he said.