The National Petroleum Authority (NPA) has responded to concerns raised by the Africa Centre for Energy Policy (ACEP) regarding its decision to implement a price floor for petroleum products starting April 16, 2024.
In a press release, the NPA clarified that the price floor aims to address issues related to unhealthy price competition among Petroleum Service Providers (PSPs) and ensure the sustainability of the petroleum downstream industry.
The NPA explained that the decision to introduce price floors was reached after thorough assessment and consultation with key stakeholders in the industry.
The aim is to protect the interests of both consumers and PSPs by ensuring that costs such as fixed costs, taxes, levies, and statutory margins are adequately covered.
Contrary to concerns raised by ACEP, the NPA emphasized that the price floors will not hinder competition among PSPs or result in higher prices for consumers.
PSPs will still have the freedom to determine their profit margins, as per the existing price deregulation policy. The NPA assured that variations in prices will continue to reflect the competitive nature of the industry.
To enhance transparency, the NPA committed to publishing the price floors prior to each pricing window for public reference.
Additionally, the Authority highlighted existing measures, such as the Petroleum Product Marking Scheme and Electronic Cargo Tracking System, to address industry challenges such as the influx of illicit products and tax evasion.
The implementation of the price floor is part of the NPA’s Amended Pricing Guidelines rolled out on April 1, 2024.
Despite industry concerns raised by stakeholders such as the Chamber of Bulk Oil Distributors and the Chamber of Petroleum Consumers, the NPA remains confident that the policy will meet industry expectations and contribute to the sustainability of the petroleum downstream sector.
As the implementation date approaches, the NPA assured stakeholders of its commitment to addressing any outstanding concerns and ensuring a smooth transition.
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