The retail pump price of petroleum may be experiencing a further increase as the Federal Government is considering the adding of cost of managing the national strategic stocks of petroleum products to the retail price of the commodities.
According to a reliable report made available to Unmask NG, the proposal is contained in the 2020 petroleum industry bill (PIB), which is before the national assembly to be passed.
This indicates that the passing of the bill and subsequent signing into law of the PIB will result in a further increase in the pump price of petrol. The cost of managing the national strategic fuel stock would form a critical component of the pricing template of petroleum products which will determine the pump price of the commodities.
In the new PIB, the new Nigerian midstream and downstream petroleum regulatory authority that would emerge from the scrapping of the petroleum products pricing regulatory agency(PPPRA) and the petroleum equalization fund(PEF) would be charged with the responsibility of setting up and managing the national strategic stocks of petroleum products.
Subsequently, this new agency will deduce the actual amount to be charged as a levy for financing and strategic petroleum products reserves. This would form part of the retail price of each of the petroleum products and also mandate to work with security agencies in deciding areas of the country where the national strategic stocks would be maintained and distributed.
The 2020 PIB partly reads:“The Authority shall: establish, administer and ensure the storage and distribution of the national stocks of petroleum products in accordance with the regulations issued by the authority;
“Determine and publish the amount to be charged as a levy for the financing of the national strategic stock which shall form part of the petrol price of each petroleum products, such levy to be determines as a percent of the retail price and be deducted on a whole sale basis;
“And designate, in consultation with the appropriate authorities and national security agencies, the strategic locations across the country where the national strategic stocks shall be distributed and maintained.”
In the same vein, the PIB proposes that facilities and infrastructure which are to be specifically defined by the soon-to-be established Nigerian Midstream and Downstream Petroleum Regulatory Authority for the storage of national strategic stocks would be exempted from the provisions of the law relating to open access.
The other functions of the Nigerian Midstream and Downstream Regulatory Authority in the new PIB include; regulating and monitoring technical and commercial mid stream and downstream petroleum operating in Nigeria and determining appropriate tariff methodology for processing of natural gas, transportation and transmission of natural gas, transportation of crude oil and bulk storage of crude oil and natural gas.
Asides from the landing cost, other components of the pricing template include the National Transportation Average (NTA), the Nigeria Ports Authority (NPA) charges, marketers margin and transportation costs.
What this means
This is going to pose as an additional financial burden on Nigerian citizens who are already grumbling about the high cost of petrol products which has impacted negatively on the price of goods and services.
Recall that the federal government proposed a new charge on the petroleum products for road maintenance cross the country. This was roundly condemned by Nigerians and some stakeholders before the idea was buried.
