Liberalisation of fuel market, a Game Changer
DOWNSTREAM OIL & GAS SECTOR
Liberalisation of fuel market, a Game Changer
In a long awaited move, the Nigerian Government announced yesterday (11 May 2016) that after a meeting with various stakeholders, it is liberalising the downstream market to address the persistent fuel shortages that has rocked the country for the past year. The new framework means petrol (PMS) will immediately retail at a band of N135 – N145 per litre, and any Nigerian entity is now free to import the product subject to existing quality specifications and other guidelines issued by regulatory agencies. In addition, Petroleum Marketers are now required to procure FX from autonomous sources and accordingly, the Petroleum Product Pricing & Regulatory Agency (PPPRA) template will reflect this in the pricing of products. The Government expects that this move will lead to improved supply, competition and eventually drive down pump prices, as well as encourage investments in refineries and other parts of the downstream sector. The move would also mean that the NNPC’s crude for refined products swap deals will no longer be required after the expiration of current contracts in March 2017 as the market develops.
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