Femi Falana, a Senior Advocate of Nigeria, has criticized the Nigerian National Petroleum Corporation Limited (NNPCL) for determining the prices of Premium Motor Spirit (PMS), commonly known as petrol, following the deregulation of the sector. In a statement made on Tuesday, Falana pointed out that this practice violates Section 205 of the Petroleum Industry Act (PIA).
According to him, after deregulation, market forces—not the NNPCL—should determine the price of petrol, and the company's involvement in price-setting is illegal under the PIA.
Falana's stance is that the deregulated oil market should operate freely, with the law specifically guiding that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is tasked with regulating market activities, including ensuring compliance with pricing regulations, rather than NNPCL.
This raises legal concerns about the governance of the Nigerian oil market post-deregulation and the potential for market manipulation or lack of transparency.
He said, “On September 5, 2024, the Nigerian National Petroleum Corporation Limited (NNPCL) stated that foreign exchange (forex) illiquidity had been a significant factor influencing the fluctuation in prices of Premium Motor Spirit (PMS) governed by unrestrained market forces, as provided for in the Petroleum Industry Act (PIA).
“The NNPCL was explaining the pump price of PMS imported into the country at the material time. Specifically, the Executive Vice President of Downstream NNPC Ltd Mr. Adedapo Segun, explained that Section 205 of the PIA, which established NNPC Ltd, stipulated that petroleum prices were determined by free market forces. According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.
But contrary to the well-publicised statement, the NNPCL has fixed the price of PMS produced by the Dangote Refinery and Petrochemical Company Limited. The action of the NNPCL is a violent contravention of section 205 of the PIA, which stipulates that the prices of petroleum products shall be determined by market forces.
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