The Major Oil Marketers Association of Nigeria (MOMAN) has faulted the plans to fix freight rate for Premium Motor Spirit (PMS), saying it could hinder full deregulation of the downstream sector.
This was made known by the Chairman of the association, Mr Tunji Oyebanji, on Tuesday in Lagos, adding that the move could also affect competitiveness among players in the value-chain of the industry.
Mr Oyebanji was reacting to the plan by the federal government to increase the freight rate of PMS, also known as petrol, by 21.3 per cent from N7.51 per litre to N9.11 per litre.
He said that market forces should be allowed to determine any such increments.
The Executive Secretary of Petroleum Equalisation Fund (PEF), Mr Ahmed Bobboi, had recently announced plans to raise the freight rate.
Mr Bobboi made this known at the 21st Annual General Meeting of the National Association of Road Transport Owners (NARTO) in Abuja recently.
He, however, said that the government was waiting for feedback from the organised labour on the agreement reached on the planned increase in prices of PMS and electricity to raise the rate.
But Mr Oyebanji argued that, “When freight (transportation) goes up, it is reflected in the entire value chain and in the price the final product is sold but this should be determined by market forces.”
According to him, an increment in any part of the value-chain of the petroleum sector should be determined by economic parameters and consideration of its impact.
He argued that when the transporters know that there is a fixed price to their services, some of them would refuse to invest in new equipment that could improve efficiency and safe movement of products.
“That is why we have always been advocating full deregulation of the sector.
“Let market forces determine the rate of services across the value chain.
“Transporters will, therefore, have no choice than to invest in modern equipment with good safety features which will improve safety on our roads.
“We believe that this will increase competition in that layer of the value-chain,” Mr Oyebanji added.