Minister Wale Edun announces direct purchase rights for petroleum product marketers, enhancing Nigeria's deregulated PMS market. (Image /Dawson/Bloomberg via Getty Images)
The Nigerian government has announced its grant of direct purchase rights to petroleum product marketers in its latest ongoing effort to deregulate the Premium Motor Spirit (PMS) market.
In a press release signed by Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, the government outlined a significant shift towards a competitive market structure, allowing Petroleum product marketers to purchase directly from refineries without the need for middle man, which marks a new era for the Nigeria’s’s petroleum industry.
According to the statement, which was made available through the Ministry’s Information and Public Relations Unit, the Federal Executive Council (FEC) has authorized the implementation of a Naira-based sales system for crude oil and refined products.
The government seeks to make the industry competitive for Petroleum product marketers
This new system allows petroleum marketers to directly purchase PMS from local refineries, a move aimed at fostering competition and improving supply chains.
The Implementation Committee on the Sales of Crude Oil and Refined Products in Naira, chaired by Mr. Edun, held its second review meeting on October 10, 2024, where it evaluated progress under the new direct purchase model.
The minister highlighted that this development represents a major departure from the previous system, under which the Nigerian National Petroleum Corporation Limited (NNPCL) held a monopoly on purchasing and distributing PMS.
“This new mechanism allows marketers to negotiate commercial terms directly with refineries, which we believe will create a more competitive environment and improve efficiency in the market,” Edun stated.
He emphasized that the changes would lead to a more stable supply of petroleum products across the country.
In addition, Edun noted that the local production of PMS, which has now commenced, is poised to support these direct transactions.
This shift is expected to boost the availability of PMS and ensure a more reliable and stable market, benefiting not just petroleum product marketers but also consumers nationwide.
The Minister acknowledged that the move towards deregulation has raised some questions within the market but reassured the public that the government is committed to transparency. “We will continue to engage with stakeholders to ensure a smooth transition and provide clarity on all aspects of this new structure,” he said.
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As the country embraces this new purchasing framework, experts believe the direct purchase of PMS by independent petroleum product marketers will stimulate growth and efficiency in the petroleum sector.
The government’s commitment to ongoing dialogue with stakeholders is seen as crucial to the success of this new regime.
