The Nigerian Government deregulated the downstream petroleum sector with effect from March 19, 2020. The key argument was that the fuel subsidy regime which gulps billions of Naira annually, had become unrealistic and unsustainable. One or two months later, with the impact of COVID-19 biting hard, disruptions in the global demand and supply chain turning everything askew and the corresponding effect of these factors on government revenue which had dipped terribly, government pointed to additional justifications for its action.

It was further argued that the subsidy regime benefits the rich at the expense of the poor. The effect, as explained, is that the pump price of fuel will now be determined by market forces. In other words, since petroleum products are refined from crude oil, the price of the crude for refining will determine eventual cost at the fuel station.

Prices thus responding to market forces could and would go up and down. Government spokespersons further assured the public that the Federal Government through the Petroleum Products Pricing Regulatory Agency (PPPRA) would under the new arrangement continue to interface with the markets to prevent arbitrary price fixing, and protect the interest of consumers.

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Source: OrientEnergyReview