The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has taken steps to break the monopoly of the Nigerian National Petroleum Company Limited (NNPC) by license additional oil marketers for petrol importation.
The Chief Executive of the NMDPRA, Mr. Farouk Ahmed, disclosed this on Wednesday in Abuja, after meeting with the marketers at the agency’s headquarters.
This expansion of the market and the entrance of more entities into importation is expected to benefit Nigerians by fostering competition and potentially lowering petrol prices, as long as there is no price fixing.
Ahmed emphasized that the NMDPRA will not allow exploitation of consumers by businessmen in the downstream sector, even in a deregulated market.
Ahmed further explained that as the NNPC reduces its importation in compliance with regulations set by the Federal Competition and Consumer Protection Council (FCCPC), which prevents one entity from controlling more than 30% of the market, there is a need to fill the resulting gap.
“NNPC is slowing down on other importation, so we need to have someone closing up the gap that NNPC is creating so that we don’t have a shortage in the country.” He said.
According to him, the NMDPRA is currently processing licenses for additional marketers, and some have already made arrangements to import petrol in July.
“The licences, we are processing them. Some or about two to three marketers already came to us last week to say that they have already booked cargoes to come in July.
“So, these are some of the very interesting things that we have received propositions for, which are very interesting and we are fast-tracking the licenses to make sure they import. We are interacting with the NNPC every day to ensure that the market is well supplied and there’s no gap in importation,” Ahmad stated.
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The goal is to ensure a consistent supply of petroleum products and avoid shortages in the country. Ahmed assured that the NMDPRA maintains regular communication with the NNPC to ensure market stability and uninterrupted importation.
Regarding foreign exchange availability, Ahmed stated that in the deregulated market, marketers can independently source FX from available channels, without relying on the government or Central Bank of Nigeria (CBN) subsidies.
He argued that the petrol prices set by NNPC already consider the exchange rate and would be adjusted accordingly if the naira strengthens or weakens.
Standardization of imported products is also deemed crucial by Ahmed to prevent consumers from being deceived or receiving lower quality products.
During the meeting, the oil marketers expressed their commitment to collaborating with security agencies to facilitate the smooth movement of petroleum products.
Transparency in both oil marketers’ and the national oil company’s importation processes is a priority for the NMDPRA to ensure that consumers receive value for their money.
Ahmed acknowledged that petrol prices may vary across the country due to local transportation logistics.
He said the bridging or equalization fund has been removed, and the NMDPRA will not impose price caps to allow market forces to determine prices. However, exploitative practices will be discouraged.
He added that a small team will be formed to examine the amendment to the Petroleum Industry Act (PIA) that restricts certain entities from importing petroleum products into the country.
