The Federal Ministry of Finance has announced a major shift in the petroleum sector, with a new mechanism allowing petroleum product marketers to purchase Premium Motor Spirit (PMS) directly from local refineries. This development follows a directive from the Federal Executive Council (FEC) and the implementation of a Naira-based sales structure for crude oil and refined products.
The update was provided during the second review meeting of the Implementation Committee on the Sales of Crude Oil and Refined Products in Naira, chaired by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun. The meeting, held on October 10, 2024, focused on evaluating the transition towards a deregulated market structure and addressing changes in the purchasing model for PMS by marketers.
Key Changes:
Under the new model, marketers can now buy PMS directly from refineries, a significant shift from the previous arrangement where the Nigerian National Petroleum Corporation Limited (NNPCL) acted as the sole purchaser and distributor. This direct purchase mechanism allows marketers to negotiate commercial terms directly with refineries, a move expected to promote competition and enhance the efficiency of the petroleum product supply chain.
“This direct purchasing mechanism fosters a more competitive market environment and enables a smoother supply chain for petroleum products,” the Ministry explained, noting that this will help to stabilize market conditions and improve product availability for Nigerians.
The Ministry also highlighted the commencement of local PMS production as an essential factor in supporting these direct transactions. This increased local production is seen as a key element in making the new system work efficiently, improving both supply and market stability.
While the new model marks a significant departure from previous practices, the Ministry acknowledged that there may be concerns and discussions around this transition. “We are committed to providing clarity on this development and will continue to engage with stakeholders to ensure a seamless transition process,” Mr. Edun assured.
The Ministry expressed confidence that the changes would benefit all Nigerians by creating a more competitive and efficient petroleum market, as it works to ensure transparency and ease in the new system.
