During the inaugural address of Nigeria’s new president, Bola Ahmed Tinubu, on May 29, 2023, he announced the removal of fuel subsidy. The announcement triggered the increase in pump prices by marketers. It also resulted in renewed fuel scarcity across the country. Fuel subsidy has been the subject of heated debate in all quarters in Nigeria even since as far back as 2012. Fuel subsidy is the payment that the government make to importers of fuel to lower the price of fuel across the country.
It spurred the “Occupy Nigeria” protest in 2012 during the administration of Goodluck Ebele Jonathan. The same action which the new president undertook was the same that Jonathan planned to take before opposition leaders mobilized the masses to protest at strategic points. Ojota was one of those places in Lagos State. Eventually, the Federal Government of that period reversed the removal of the subsidy. But now, the country must have been primed for its removal as all the three leading presidential candidates sided with its removal in their manifestoes.
Regulatory authority ready to issue licenses to fuel-importing companies.
As fuel subsidy removal becomes a reality in Nigeria, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said that it is ready to issue licenses to companies interested in importing Petroleum Motor Spirit (PMS). Farouk Ahmed, the chief executive officer of NMDPRA, revealed this to the media on Tuesday, May 30, 2023. This must have been prompted by calls from business leaders for the Nigerian National Petroleum Company Limited (NNPCL) to dismantle its import monopoly.
Ahmed said that the criteria for importing other fuels, such as kerosene and diesel, will be applicable to the importation of petrol. However, he said there are a lot of conditions to be met before you are given a license to import petrol. “I cannot give you all the rundown now but I can tell you that just the way marketers import diesel or jet kero, there are conditions for all that and the same condition will apply to those who want to import Premium Motor Spirit (PMS),” he said.
National petroleum companies have been importing fuel since 2017.
In 2017, the defunct Nigerian National Petroleum Corporation (NNPC) moved from importing about 90 percent of petroleum products consumed in Nigeria to being the sole importer. The reason for this was to ensure that there was an adequate supply of petroleum products and that cases of fuel scarcity are mitigated. It is generally believed that a purely government agency’s handling of the importation and distribution to marketers will foster fairness and remove prejudice as there would be no favourites.
Then in 2021, the NNPC Limited was incorporated, following the orders of the Petroleum Industry Act (PIA). However, the NNPCL remained the sole importer of Premium Motor Spirit (PMS) against the backdrop of subsidy payments. The company announced earlier this year that it pays N400 billion monthly to keep the cost of fuel low in the country. On Monday, the NNPCL said that the Federal Government owes it N2.8 trillion as cost of subsidy payments. With the removal of the subsidy, calls for the NMDPRA to issue importation licenses to companies other than the NNPCL have been high.
PIA stipulates the criteria for licenses to be issued.
The NNPCL on May 29, 2023, announced the upward review of pump prices across the country, with the cost per liter rising as much as N537. Under section 197 (2) of the Petroleum Industry Act (PIA), only companies that are lessees producing crude oil and/or condensates or who are holders of crude oil refining licenses are eligible to supply wholesale petroleum liquids (including petrol importation). The Petroleum Industry Act also empowers the NMDPRA to issue licenses to refiners or producers of crude oil. The regulation provides that the minister of petroleum must approve such licenses.
NNPC Limited: Website