The federal government yesterday reiterated that it has ended petrol pricing, explaining that direct purchase mechanism allows marketers of premium motor spirit (PMS) to negotiate commercial terms directly with refineries.
The initiative is expected to foster a more competitive market environment and enable a smoother supply chain.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, disclosed this.
The direct purchase structure was put in place as against the initial arrangement where the Nigerian National Petroleum Company Limited (NNPCL) was the sole off-taker.
In a statement, Edun who is the Chairman of the Implementation Committee on Domestic Sales of Crude Oil in Local Currency, said his committee held its second review meeting on Wednesday, October 10, 2024.
Giving what he described as a key update, the minister stated that the “New Direct Purchase Model,” was the most significant change under the new regime which now allows petroleum product marketers to purchase PMS directly from local refineries.
This, he said, marked a departure from the previous arrangement where the NNPC served as the sole purchaser and distributor of PMS from the refineries.
“This direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.
“With the commencement of local PMS production, the market is better equipped to support these direct transactions,” he said.
The statement further reads: “Following the directive of the Federal Executive Council (FEC) and the implementation of the new Naira-based sales mechanism, the Implementation Committee on the Sales of Crude Oil and Refined
Products in Naira, chaired by the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun. held its second review meeting on Wednesday October 10, 2024.
“The meeting focused on assessing the transition towards a deregulated market structure for Premium Motor Spirit (PMS) and addressing the change in the purchasing model for petroleum product marketers.
“The most significant change under the new regime is that petroleum product marketers can now purchase PMS directly from local refineries. This marks a departure from the previous arrangement where the NNPC served as the sole purchaser and distributor of PMS from the refineries.
“This direct purchasing mechanism allows marketers to negotiate commercial terms directly with the refineries, fostering a more competitive market environment and enabling a smoother supply chain for petroleum products.
“With the commencement of local PMS production, the market is better equipped to support these direct transactions. This transition is expected to enhance efficiency in product availability and stabilize market conditions for the benefit of all Nigerians.
“The committee recognises that there are questions and discussions regarding this change in the market structure. We are committed to providing clarity on this development and will continue to engage with stakeholders to ensure a seamless transition process.”
The NNPC during the week officially increased the official pump price of petrol in its retail outlets to N1,030 per litre in Abuja from the N897 it had announced on September 3 and from N855 to N998 in Lagos.
The move, it was learnt, effectively put an end to Nigeria’s multi-decade wasteful petrol subsidy regime, at least for now.
