The Nigerian government will deregulate the domestic pump price of imported gasoline in a bid to encourage private marketing companies to import more, minister of state for petroleum Emmanuel Kachikwu said late Wednesday, as the country seeks to end months of crippling fuel shortage.
Kachikwu said on state television that the national fuel pricing regulatory body, the Petroleum Products Pricing Regulatory Agency, would announce Thursday a new price band not above Naira 145/liter ($0.74/liter), which fuel marketers would not be permitted to exceed.
"In order to increase and stabilize the supply of the product any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies," Kachikwu said.
The government previously maintained a regulated price of Naira 86.50/liter for gasoline, but private marketers said this was not enough to cover the cost of imports, which had already been hiked by tight access to foreign exchange as well as high bank charges.
A dispute between the Nigerian government's fuel regulatory body and private fuel marketers on the pricing template for importing gasoline was one of the main causes for a severe shortage crisis that engulfed the country earlier this year.
The government said that the scarcity of foreign exchange has also hampered the ability of fuel marketers to import gasoline.
Marketers have been unable to meet their approximate 50% portion of total national supply of gasoline, according to a government statement.
"All oil marketers will be allowed to import PMS on the basis of foreign exchange procured from secondary sources and accordingly the PPPRA template will reflect this in the pricing of the product," the minister said.
The government pays a subsidy on imported gasoline of the difference between the so-called landing cost and the officially regulated domestic pump price, but this template is now expected to change.
Despite producing just over 2 million b/d of crude, Nigeria imports more than 90% its fuel requirements, with its four state-owned refineries running at very low utilization rates.
