Introduction

A major reform introduced by the Petroleum Industry Act 2021 (the “PIA”) is the deregulation of the pricing regime for the sale of petroleum products in Nigeria. This is because the PIA requires wholesale and retail prices of petroleum products to be determined by unrestricted free market pricing PIA also repeals the 2003 Petroleum Products Pricing Regulatory Agency (Establishment) empowered the Petroleum Products Pricing Regulatory Agency (the “PPRA”) to determine the pricing policy of petroleum products. Any extant rights and obligations previously vested in the PPRA are now vested in the Nigerian Midstream and Downstream Petroleum Regulatory Authority (the “Authority”) which was established under the PIA.

Without further measures, such deregulation may not have had an immediate significant impact on the pump price of Premium Motor Spirit (“PMS” or “Fuel”) due to the long-standing subsidy scheme implemented by the Federal Government of Nigeria (the "FGN”). Under the said scheme, a portion of the national inflow is applied towards paying the difference between Fuel importation costs (which would ordinarily be passed on to end consumers) and the regulated pump price, in a bid to enable affordable access to PMS.However, in his inaugural address on Monday, 29 May 2023, His Excellency, President Bola Ahmed Tinubu declared that Fuel subsidy “is gone” as the 2023 FGN budget, which was approved prior to his assumption of office, makes no provision to accommodate Fuel subsidy beyond mid-2023. He also stated that Fuel subsidy “can no longer justify its ever-increasing costs in the wake of drying resources"– thus indicating that the current administration has no intention of making any arrangements to reintroduce provision for Fuel subsidy through a supplementary budget or in subsequent budgets. As such, it is safe to assume that there would no longer be a Fuel subsidy regime in the country and, accordingly, it becomes crucial to adopt measures that can cushion the effects of this development on the citizens. This article, therefore, considers some of such measures, as well as the heightened responsibility that the removal of Fuel subsidy places on the relevant regulatory agencies.

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