Amidst Clamour For Removal of Fuel Subsidy, Buhari Approves Petroleum Products Transports Freight Rate


Amidst clamour by Nigerians that the government should remove subsidy, President Muhammadu Buhari has considered and approved the upward review in freight rate for transporters to alleviate the challenges associated with the distribution of Premium Motor Spirit (PMS) nationwide.

But there is nothing to suggest that would be increase in price of Premium Motor Spirit or petrol to make up for the rate review.

Nigerians have been laud about the removal of subsidy which has caused a lot of economic distortions in the country. The subsidy has hit N6 trillion even though  what was officially budgeted for it was N4 trillion in the fiscal year 2022.

“On April 14, 2022 the National Assembly passed a revised Appropriation Act which upwardly reviewed the 2022 budget amount for Premium Motor Spirit (PMS) subsidy by N442.72billion, from N3.557 trillion to N4 trillion. Again, this is at variance with the spirit of the PIA regime which seeks establishes a market based pricing framework.”

The decision of the President may however be at variance with the Petroleum Industry Act .

The Petroleum Industry Act 2021 (“PIA”) is unequivocal in its intention to deregulate the pricing of petroleum products in the downstream oil and gas sector in Nigeria.

Section 205(1) of the PIA provides – “Subject to the provisions of this Section, wholesale and retail prices of petroleum products shall be based on unrestricted free market pricing conditions.” The use of the word “shall” in the section implies that the provision is mandatory. The only exception to this is where a licensed activity is a monopoly service or where a licensee is a dominant provider of services (205(2).

The approval was after due consultations with industry-wide stakeholders at the instance of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (the Authority).

According to NMDPRA in a press statement, the review was necessitated by the upswing in the global price of petroleum products especially Automotive Gasoil (Diesel) and its implication on the cost of transporting Premium Motor Spirit (PMS) nationwide.

“Consequently, the Authority wishes to advise as follows that:

  1. In line with the mandate of the Authority as prescribed in the PIA (Section 31(i)) to develop and enforce a framework on tariffing and pricing for natural gas and petroleum products, the transporters freight rate has been reviewed to reflect current market realities.
  2. The revised freight rate takes effect from 1stJune 2022 while still maintaining the current regulated PMS pump price of N165.00/Litre.

iii. An Inter-agency Team is being constituted to ensure reconciliation and payment of outstanding transporters claims in line with established payment procedure under the Bridging Fund Scheme.”

It stated that Nigerian National Petroleum Company (NNPC) limited, the sole supplier of PMS, has maintained over Thirty-Two (32) days sufficiency in-country.

“We believe the increase in transporters freight rate will further encourage Nigerian Association of Road Transport Owners (NARTO) and other stakeholders to deploy more trucks to transport PMS nationwide to ensure adequate supply of the product.”

It has however assured the public of its commitment to building a strong and sustainable Midstream and Downstream Petroleum sector.



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