The federal government has deregulated the downstream sector of the petroleum industry, which will raise the price of fuel to N145 a liter.
According to the Minister of State for Petroleum, Ibe Kachikwu, who made the announcement after meeting with top government officials in Abuja on Wednesday, the policy aims to increase the supply of fuel in Nigeria.
Stakeholders present at the meeting agreed that the primary cause of fuel scarcity in Nigeria is “the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the federal government.” This has prevented private oil marketers from meeting their 50 percent portion of the total national supply of Premium Motor Spirit (PMS).
To remedy the fuel shortage, the Ministry of Petroleum Resources removed regulations restricting the importation of fuel.
The press statement reads, "In order to increase and stabilize the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by Regulatory Agencies.
"All Oil Marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product.
"Pursuant to this, PPPRA has informed me that it will be announcing a new price band effective today, 11th May, 2016and that the new price for PMS will not be above N145 per liter.”
According to the press statement, the policy change will increase the supply of fuel in the country and drive up competition, which will eventually lead to a fall in fuel prices.