The continued existence of the Petroleum Products Pricing and Regulatory Agency (PPPRA) and Petroleum Equalisation Fund (PEF) is a fundamental flaw that contradicts the deregulation policy in the downstream sector, civil society organisations said Friday.
The consortium led by the Nigeria Natural Resource Charter (NNRC) called for the immediate repeal of the PPPRA Act, the PEF(M)B Act and, specifically, section 6(1) of the Petroleum Act, Schedule 1 on Price Control Act.
The consortium took the positions at the end of a one-day webinar held on Thursday.
The PPPRA is the government agency responsible for the monitoring and regulation of the prices of petroleum products in the country.
Similarly, the PEF is the government agency responsible for ensuring uniformity in the retail price of petroleum products sold across the country.
The fund is empowered to reimburse marketers with whatever cost they incur while taking petroleum products from one part of the country and sold in another.
In March, this year, the federal government announced the removal of fuel subsidy from the pricing template of petrol in the country.
The Minister of State for Petroleum Resources, Timipre Sylva, said the removal of subsidy signalled the commencement of the deregulation in the downstream sector of the petroleum industry.
With the deregulation policy, Mr Sylva said the government would no longer be involved in the process of determining or fixing the price of petrol in the country.
Rather, he said, petrol prices sold by fuel marketers would be determined through the interplay of the market forces of demand and supply.
Analysts say the government’s decision to strip itself of involvement in the fuel pricing regulation process effectively rendered the continued existence of the PPPRA and PEF irrelevant, as their roles fundamentally contradict the principles of deregulation.
‘Incorporate deregulation in PIB’
Meanwhile, the programme coordinator of the NNRC, Tengi George-Ikoli, advised the government to give the deregulation policy a legal backing, by enacting appropriate legislation or embedding it as part of the Petroleum Industry Bill (PIB) expected to be submitted to the National Assembly soon.
“The existence of all these Acts only shows the potential of the government returning to a price-fixing regime. This is a demonstration to the Nigerian people that the declaration of full deregulation is merely a statement of intent and not yet honoured,” the group said.
The consortium stressed the need for the government to commit to the sustainability of no-subsidy and deregulation policy through either stand-alone legislation, or appropriate clauses integrated into the Petroleum Industry Bill (PIB) currently on its way to the National Assembly.
“While we await appropriate legislation, we require the government to clarify the role of the Petroleum Support Fund, (PSF) in the new deregulation regime. Clarity is required about how the fund is being managed, whether the over-recovery sums were deposited there and how they are expected to be spent,” the group added.
The group also urged the petroleum ministry to back its deregulation policy statement by empowering appropriate agencies, like the Federal Competition and Consumer Protection Council (FCCPC), to take over the consumer protection interests of Nigerians that may be adversely affected under a deregulated downstream sector.
This, it said, would protect the interests of the poor Nigerians, who would suffer exploitation in the hands of profiteering fuel marketers.
On efforts to ameliorate the immediate effects of the removal of petrol subsidy, the group said the government should channel the revenues from the subsidy removal to improve the quality of lives of Nigerians.
Also, the group called on the relevant authorities, especially the Central Bank of Nigeria (CBN), to ensure a level-playing field for all importers of petroleum products.
‘Reverse losses on refineries’
On the loss-making refineries revealed in the published 2018 audited reports, the group said the NNPC must take urgent steps to reverse the trend, as the refineries remain high-cost centres for the government, given the impact of COVID-19 pandemic and other fiscal pressures on the country’s economy.
“The Nigerian government should create an enabling environment for the private sector to contribute to the efficient running of the refineries so that the country can reach its domestic refining target.
“If the NNPC must remain a player in the market, it must strive to operate under the same conditions and rules as other players in the sector regulated only by the prevailing market forces and competition,” the group said.
The consortium, formed in April 2020 and led by the NNRC comprises of the Civil Society Legislative Advocacy Centre (CISLAC), BudgIT, Connected Development (CODE), Media Initiative for Transparency in Extractive Industries (MITEI), OrderPaper Advocacy Initiative, Women in Extractives (WiE), and Extractive 360.
Others are Centre for the Study of the Economies of Africa (CSEA), Youth Forum on Extractive Industry Transparency Initiative (Youth Forum on EITI), Publish What You Pay (PWYP), Africa Network for Environment and Economic Justice (ANEEJ), African Centre for Leadership Strategy and Development (CentreLSD), Centre for Development Support Initiatives (CEDSI), Centre for Transparency Advocacy (CTA) and Koyenum Immalah Foundation (KIF).