Head of Pricing at the National Petroleum Authority (NPA), Abas Ibrahim Tasunti, has revealed that the Authority will set up a committee to review a price deregulation policy following concerns among stakeholders
According to him, it is necessary to review the policy to ascertain whether “it’s achieving its purpose”.
“So, as you know, the deregulation came into effect in July 2015 and it’s been exactly six years since its implementation.
“The goal of the committee is to generally review the policy and see if there are problems that have to be resolved. Naturally, with every policy, its implementation will come with challenges and one of them is price undercutting. It’s one of the things we are looking at, to see how we can put in measures to make sure that OMCs and BDCs are operating within the framework that they’re supposed to work”.
Abas Ibrahim Tasunti
Mr Tasunti further revealed that the issues of price undercutting have been brought to the attention of the Authority.
In lieu of this, he indicated that the NPA has a view of all the prices that OMCs are buying products from the BDCs. He further noted that the Authority is also privy to “what margins they’re putting their price buildup”.
Additionally, Mr Tasunti explained that the committee at the end of the day will make recommendations to address some issues.
“Generally, all the stakeholders agree that this deregulation policy has worked but for the players; the BDCs and OMCs issues of price undercutting is a concern to them and we are going to come up with recommendations to address that”.
Abas Ibrahim Tasunti
Addressing pricing illegalities
Touching on the issue of pricing, Mr Tasunti maintained that the NPA intervene in situations where companies sell petroleum at price “that is unrealistically low”.
“But the nature of the market is that you would hardly see anyone selling at a price that does not have a margin. If that is happening then it means there’s an illegality which NPA is using other means to address. We have several technologies we’ve introduced to address illicit product traits.
“However, the differences you see on the market does not mean that there are illegalities ongoing. It’s purely because of the competition on the market, that is why you see those price variations. So, if a company is buying at a lower price from a BDC and also is using a lower margin, you’d definitely expect that, that company’s pricing will be lower than the other competitor.
Abas Ibrahim Tasunti
NPA allays concerns of consumers
Furthermore, he assured consumers the circulating prices churned out by OMCs are not a cause for concern.
“With respect to pricing, we want to give consumers assurance that we have seen the prices and the prices we see on the market are not something they should be worried about. They are working within what the law says; the prescribed petroleum formula, they’re working within that. Whenever NPA, like I said, based on our reviews we see that a company pricing is unrealistically, action is taken. But that hardly happens because of the level of competition.
“So, with respect to price undercutting in particular, that is something that has come to our attention and we are looking into that.
“Almost every stakeholder agrees that price deregulation policy is a good policy. So, we are looking at how to make it work properly as expected. We are going to come up with how to make the policy work”.
Abas Ibrahim Tasunti
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