Major Oil Marketers Association of Nigeria (MOMAN) says the plans to fix freight rate for Premium Motor Spirit (PMS) can hinder full deregulation of the downstream sector.
MOMAN Chairman, Mr Tunji Oyebanji, who stated this in Lagos, said the move could also affect competitiveness among players in the value-chain of the industry.
Oyebanji was reacting to the plan by the Federal Government to increase the freight rate of PMS, also known as petrol, from N7.51 per litre to N9.11.
He said that market forces should be allowed to determine any such increments.
Alhaji Ahmed Bobboi, the Executive Secretary of Petroleum Equalisation Fund (PEF), had announced plans to raise the freight rate.
Bobboi who was spoking at the 21st Annual General Meeting of the National Association of Road Transport Owners (NARTO) in Abuja, said that 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.
“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,’’ Oyebanji said.
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 on 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,’’ Oyebanji added.