NMDPRA blames logistics costs, single-source refining for petrol price volatility

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) says crude oil sourcing, single-source domestic refining, logistics and transportation costs are driving volatility in petrol pump prices under the deregulated market.

George Ene-Ita, head of public affairs at NMDPRA, spoke in an interview with NAN in Abuja on Sunday.

Ene-Ita said petrol prices are fully deregulated and therefore reflect fluctuations associated with the supply chain, including crude procurement, refinery delivery timelines, imported cargoes, transportation and taxes.

He said marine and inland taxes associated with the movement and supply of petroleum products are also factored into the pricing.

“This issue is knotty in the sense that there are various factors involved,” he said.

“Pump price 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 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.”

Ene-Ita said transportation and landing costs, as well as marine and inland taxes, also contribute to the price of petrol.

“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.

The spokesperson said refinery pricing templates and ex-depot prices are not regulated under the current framework.

Ene-Ita, however, said NMDPRA is collaborating with stakeholders and agencies, including the Federal Competition and Consumer Protection Commission (FCCPC), to ensure price equilibrium and parity at the last mile.

Also speaking, Abubakar Maigandi Garima, president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), urged the federal government to intervene in crude oil pricing for domestic refining to moderate fuel prices and ease pressure on consumers.

Maigandi said the international crude oil market is posing challenges to domestic petrol pricing as refiners have to procure crude at prevailing market prices.

He said higher crude oil prices translate into increased production costs for refiners, who subsequently pass the additional costs to the market.

The IPMAN president called for government intervention to reduce the cost of crude supplied to domestic refineries during periods of volatility in the international market.

He said such intervention should not be interpreted as a return to 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,” he said.

“When the refinery refines the product at a lower cost, it can also reduce the price for Nigerians, and this will help the economy.”

Maigandi also called for a more predictable crude oil pricing arrangement for domestic refineries, saying frequent fluctuations make 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.

Maigandi said such an arrangement would enable domestic refineries to plan better and potentially provide more stable prices for petroleum products.

On September 1, petrol prices climbed above N1,300 per litre as brent crude, the global oil price benchmark, rose to $95.36 per barrel.

Two days later, IPMAN said filling stations across the Federal Capital Territory (FCT) will begin reducing petrol pump prices in the next few days.(TheCable)