An increase in fuel pump price may be caused by several factors such as a rise in the price of international crude oil and unpredictable changes in foreign exchange rates. Over the years, there have been series of upsurges in the price of premium motor spirit also known as petrol or fuel in Nigeria. A recent occurrence of this event which caused an outrage and confusion among citizens of the country took place on the 12th day of March 2021 when Nigerians woke up to a fuel price hike despite assurances by the Nigerian National Petroleum Corporation that there will be no increase in the price of petrol in the month of March. The Petroleum Product Pricing Regulatory Agency went ahead to fix the pump price of Premium Motor Spirit at N212.61 per litre for the month of March. Although this was later resolved it is pertinent that we have a review of the legal framework regulating the price of Premium Motor Spirit in Nigeria.
The Constitution of the Federal Republic of Nigeria 1999 (as amended) by virtue of Section 44(3) vests the exclusive control, ownership, and management of oil and gas in the Federal Government. Thus Petroleum resources are held in trust on behalf of the citizens of Nigeria by the Federal Government for the overall benefit and development of the country. The provisions of the constitution states clearly that;
“Notwithstanding the foregoing provisions of this section, the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly”.
Some of the key regulators of the Petroleum sector in Nigeria are; The Nigerian National Petroleum Corporation (NNPC) empowered to participate in Petroleum operations on behalf of the Government and The Petroleum Product Pricing Regulatory Agency a governmental organisation saddled with the responsibility of determining the pricing policy of Petroleum Products.
The Petroleum Product Pricing Regulatory Agency (PPPRA) Act was enacted to establish the Petroleum Product Pricing Regulatory Agency (PPPRA) which is the agency that has the power to establish the benchmark for pricing of Petroleum Products in Nigeria. The agency is empowered under Section 7 of the PPPRA Act to determine the pricing policy of Petroleum Products in Nigeria and periodic approval of benchmark prices for Petroleum products. By virtue of Section 24 of the PPPRA Act;
The Agency may with the approval of the president, make such regulations as in its opinion are necessary or expedient for giving full effect to the provisions of this Act and for the due administration of its provision.
In exercise of the above powers, the PPPRA in 2020 issued a notice of the “Market Based Pricing Regime for Premium Motor Spirit (MBPRP) Regulations 2020”. This regulation does not nullify the powers of the PPPRA. The PPPRA under the provisions of the Regulations is to provide advice to the NNPC and Oil Marketing Companies on monthly guiding retail prices at which the product will be sold across Nigeria. The monthly guiding prices are to guarantee reasonable returns to operators while ensuring consumers pay appropriate prices in line with market reality and are not overcharged. Regulation 2 and 3 of the MBPRP Regulations state respectively that the PPPRA shall not propose a price rate below a realistic market pricing and the price of PMS advised by the PPPRA shall be the guiding retail price at which the product shall be sold across the country.
The regulations do not in any way confer on marketers the power to fix prices for the product as they deem fit. The implication of this would be no deregulation of prices of PMS. The regulations also do not have a fixed duration the implication of this being that it can be withdrawn at any time. To attract key investments in the Petroleum sector of the country there is a need for a fixed law that can be reviewed from time to time to meet up with the ever-changing world. There is also a need for the powers of the key regulators to be kept in check to avoid abuse of powers.
BY V.C.UCHECHUKWUGAEMEZU ATULOMAH ESQ.
