Oil Marketers Receive Permission To Determine Fuel Price As FG Removes Cap

Oil marketers will now determine the price of Premium Motor Spirit (PMS) price, popularly known as petrol, after the Federal Government relaxed its grip on the pricing of fuel to the public. The government removed the cap at which it previously allowed oil marketers to sell petrol.

The decision by the government gives the oil marketers the leeway to fix the market price without regulatory control. This means the control of the Petroleum Products Pricing Regulatory Agency (PPPRA) has been curbed as regards fuel price.

Oil marketers have been clamouring for more control over the fuel price, calling for government to withdraw its grip. The new development was contained in a memo titled ‘Market Based  Pricing Regime for Premium Motor Spirit (PMS) Regulations, 2020.

In the memo dated March 30, 2020, but realised on May 4, 2020, it was stated that “The price cap per litre in respect of Premium Motor Spirit (PMS) is removed from the commencement of these Regulations. From the commencement of these Regulations, a market-based pricing regime for PMS shall take effect,” he said.

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This comes after the market regulator disclosed in May 31, 2020, that oil marketers will now sell petrol within the price range of N121.50 and N123.50. Although, the regulatory price is yet to be implemented as oil marketers said it will need to sell off its existing commodity before switching to the new price.

The oil marketer had also stated that the government is trying to pit the public against oil marketers by announcing a price slash without due process. They insisted that the price won't be changed immediately as the public want it.

With the government removing the cap now, the oil marketers have the freedom to determine the commodity price. It is, however, not known if the oil marketers will sell for the initial regulatory price which declined, or increase the price to reflect cost since subsidy has been removed.