Following recent increases in price of petrol, the Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to stay away from determining the cost of the product as implemented through the Petroleum Equalisation Fund (PEF) and Petroleum Products Pricing Regulatory Agency (PPPRA).
The Chamber, in an article titled: “The Nigerian Economy & Stakeholders’ Standpoint: A Policy Perspective” sighted by New Telegraph, said government’s absence from the price fixing process would guarantee full liberation in the downstream sector.
The Chamber also noted that the role played by the two agencies was costing the economy some N60 billion in administrative functions. The pump price of petrol was last week increased to N161 per litre. LCCI also said Nigerians were in for tougher times ahead as they are expected to pay more for fuel before year end over Federal Government’s failure to put in place consumer protection mechanisms to checkmate exploitation by industry operators.
The Chamber explained that while it supports the removal of subsidy on fuel importation and full deregulation of the downstream sector of the economy, the determination of fuel prices by the Federal Government through PPPRA was contradictory to the economic tenets of liberalisation. LCCI, in the article, emphasised that government’s role should essentially be price monitoring and not price determination, adding that fixing fuel pump price as a way to preventing price gouging should be its priority in the downstream sector and not as an enforcer.
It noted that the arbitrary increase in pump price by PPPRA indicated that government was not protecting Nigerians enough or ready to protect them despite the challenges they are facing with COVID-19 crisis. It added that both institutions (PEF and PPPRA) lacked relevance in a deregulated environment, adding that government should closely monitor their activities in order not to compound the economic gains and purchasing power of common Nigerians. According to LCCI, “the removal of subsidy on fuel importation is a positive development for the sector, as it has been one of the reforms being advocated by industry operators.
“The determination of fuel prices by Petroleum Products Pricing Regulatory Agency (PPPRA) is contradictory to the economic tenets of liberalisation. “While it is understandable that government’s involvement in price determination is to prevent price gouging, however, rather than fixing prices, government ought to have strengthened its consumer protection mechanisms to checkmate consumer exploitation by industry operators. “Government’s role should essentially be price monitoring and not price determination. Institutions involved in price determination such as Petroleum Equalisation Fund and Petroleum Products Pricing Regulatory Agency are costing the economy some N60 billion in administrative functions.
Both institutions lack relevance in a deregulated environment.” While reacting to the permission given to oil marketing companies to resume fuel importation, LCCI said it was a welcome development, saying that the current partial deregulation regime does not bode well for private investment.
It stated: “To promote competition and drive efficiency, oil marketers should be allowed access to foreign exchange at the same rate with Nigerian National Petroleum Corporation (NNPC). “The current partial deregulation regime does not bode well for private investment. The sector’s investment appeal will be significantly enhanced in a fully deregulated environment. “Given its oil endowment, Nigeria has the potential to be a major refining hub in the Western and Central Africa region.” Besides, members of the organised private sector (OPS) had earlier condemned the new pump price, saying that it would further spike inflation and worsen poverty in the country.