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The Petroleum Products Pricing Regulatory Agency (PPPRA), which controls the cost of petrol in the country, is in disarray and this is disrupting the implementation of the existing pricing template.
The Guardian learnt in Abuja yesterday that the disruption in the system is caused by a lack of mechanism for a quarterly price adjustment, absence of a board and failure by government to appoint a substantive executive secretary. It was learnt that these factors have contributed more to the collapse of the pricing template than the lack of forex for fuel imports. The current open market price of petrol is above the N145 per litre.
The rising cost of crude oil in the international market has renewed pressure on government to increase the pump price as subsidy is staging a gradual comeback. The Nigeria National Petroleum Corporation (NNPC) has almost become the last resort in the supply chain following the inability of independent marketers to access foreign exchange for fuel imports.
The Guardian reported on Tuesday that scarcity was imminent and pump prices set to rise as marketers failed to repay their $1 billion debts with commercial banks. Government abruptly halted the subsidy regime without paying for previous imports as agreed with the PPPRA. Consequently, the fuel import loans contracted from 2014 incurred additional N160 billion, approximately $500,000 as interest.
The General Secretary of the Nigeria Labour Congress (NLC), Dr. Peter Ozo-Eson, said a lack of a properly instituted modulation scheme would continually lead to price increase.
“Any modulation scheme that is based on import will always lead to consistent price increment,” he said, urging government to build fund from crude oil savings to ensure that modulation is done.
He said the Ibrahim Mantu committee indeed recommended the modulation scheme in 2005 and how it should be operated but that the Olusegun Obasanjo government opted for Petroleum Support Fund.
While a board has been announced for the agency, it is yet to be inaugurated which has made the review of petrol price modulation for the sector impossible.
This has also rendered the Acting Executive Secretary of the Agency, Victor Shidok confused as he has not appointed a substantive general manager, operations, because he is not sure whether he will return to the position or not.
This development has led Mr. Olasupo Agbaje to combine both Operations and Corporate Services Departments, which is seen as detrimental to the functionality of the organisation.