Distance variations in pump price underway if latest version of PIGB becomes law
Unless President Muhammadu Buhari repeats turning down which he did to the previous version of the Petroleum Industry Governance Bill (PIGB) transmitted to him after its passage by the National Assembly, Nigerians residing or doing their businesses at distant towns from depots or refineries will have to pay higher to access petroleum products, especially Premium Motor Spirit (PMS) otherwise called petrol.
This is because the latest version of the PIGB as passed by the National Assembly has removed the Petroleum Equalisation Fund (PEF) from Part IV of the legislation.
Recall that PEF, which has an agency that equalises supposed pump price parity by paying the transportation or haulage cost difference so as to enable Nigerians in all part of the federation irrespective of location to buy fuel at the regulated price, had been in existence since 1975. However, the new version of PIGB has expunged the existence of the fund meaning that if President Buhari assents to the Bill, prices of fuel will begin to be driven by distance decay function which means the far distance you drive from depot location, the higher you pay per litre.
Otherwise, PEF came into existence to primarily address challenges of price differentials through the Uniform Pricing Mechanism (UPM) by ensuring the equaliation of transportation deficits of petroleum products.
Based on the new development, key programmes being planned by the agency are current stalled due to uncertainties on the continuity of the agency.
One of the key reasons adduced by the Presidency in declining assent to the earlier version of the PIGB was that “expanding the scope of the Petroleum Equalisation Fund made some provisions of the draft law to be in divergence from his administrative policy and indeed conflicted with provisions of the fund.”
Observers say the equalisation levy on PMS inclusive of bridging, National Transportation Allowance (NTA) and Marine Transport Average (MTA) was 7.66 per cent which may likely give way for paying as you go across the country.
Analysts say this may yet present another opportunity for the President to decline assent to the Bill into law.
