Since the pronouncement by President Bola Tinubu on the removal of subsidy on petrol and the subsequent adjustment of the retail pump price across the country by marketers, attention has shifted to concerns about the effective and transparent mechanism for pricing and supply of petroleum products in the country.
Also, Nigerians are concerned about how the government would manage to be accountable in the utilisation of the proceeds from the subsidy removal on petrol to impact the lives of the average Nigerians. But that’s issue for another day. #
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the agency mandated to regulate petroleum products pricing in the country, has said that the removal of subsidy in the pricing template of premium motor spirit (PMS), popularly called petrol, means the commencement of the full deregulation policy in the downstream sector of the petroleum industry.
Deregulation policy, the agency Chief Executive Officer, Farouk Ahmed, said involves the interplay of market forces of demand and supply to determine the retail prices of petroleum products without any interference of the government and its agencies.
On Tuesday, the Nigerian Extractive Industries Transparency Initiative (NEITI), the multi-stakeholder consultative agency in charge of transparency and accountability in the extractive industry, applauded the decision by the government to remove fuel subsidy on petrol.
The Executive Secretary, Orji Ogbonnaya Orji, said in Abuja that subsidy constituted a major impediment to the achievement of transparency and accountability in the management of revenues from the operations of the oil and gas industry.
Apart from the opaque pricing mechanism for petroleum products, Orji said NEITI was also concerned with the raging dispute and debate on the actual daily consumption figures for petrol in the country.
He said NEITI was convinced the daily petrol consumption figures quoted in official circles were not only incorrect, but also defies empirical logic and reason, as the average volume is far below what is real.
“NEITI has commissioned a study to determine the actual PMS consumption figures for the country based on empirical evidence and data,” Orji said.
“We have every reason to believe that the real figure will be far less than the country is being told. NEITI believes the removal of subsidy on petrol will remove all the incentives for hiking these figures in a manner that defies empirical logic and reason,” Orji added.
NEITI’s concerns are real. Figures in circulation about the country’s national petrol consumption range between 40 and 68 million litres per day.
Although some experts familiar with the workings of the oil and gas industry say the real figure would not exceed anything between 35 and 45 million litres per day, the NMDPRA said as at November 2022 the country was consuming about 66.8 million litres per day, against the Nigerian National Petroleum Company Limited (NNPCL) figure of an average of 68 million litres.
Recently, when the Group Chief Executive of the NNPCL, Mele Kyari, was guest in one of the television stations, he said it easy for the company to provide statistics on the daily liftings and truck out of petroleum product its depots across the country, than for him to say exactly the volume of petrol consumed daily throughout the country.
Using the Indian template
In New Delhi, India, the template for ensuring transparency and accountability in the supply, distribution and pricing of petroleum products is simple.
Everyday, prices of major petroleum products, mostly of automotive gas oil (AGO), otherwise called diesel, and PMS, popularly called petrol, whether new or unchanged, are published in the media everyday at 6 am. The summary of the priced, including percentage difference between the new and old prices, are reflected on the new pricing template, with explanations of reason for the differential, every weekend.
Although the prices vary from state to state due to the component items, in terms of value-added tax (VAT), freight charges, local taxes, etc, included in the computation template, all the details about the stock-in-place of products and daily loadings, lifting and bridging of petroleum products from all the depots and destination of supply, are published for public information.
In India, although market forces of demand and supply are allowed to play in the market, oil marketing companies (OMCs), including Indian Oil, the Indian equivalent of the NNPC, as well as privately-owned companies as Bharat Petroleum and Hindustan Petroleum, are also involved in the process to determine petrol and diesel on a daily basis, and rates are determined in accordance with the prevailing price of crude oil at the international oil market.
But tthere is a strong regulatory agency that regularly monitors the operations of the marketers to forestall undue exploitation of consumers and profiteering. The primary objective is to ensure the operational environment is devoid of undue exploitation of consumers by the marketers with the connivance of the regulatory agency.
Daily prices for petrol and diesel can also be received from the regulatory agency by petroleum products marketers or customers through a dedicated short messages service (SMS) line by sending a message and a city code through any of the telecom network providers.
Nigeria has since deregulation based on marketplace dynamics for over a month now since fuel subsidy was removed. Can the NMDPRA, or any other agency involved in the petroleum products distribution, supply and pricing value chain tell Nigerians with certainty the daily national consumption for petrol in the states and throughout the country? Can we consider the Indian template in our fuel distribution, supply and pricing?