Falana to Tinubu: Dump World Bank model for local refining cost

The Chair of the Alliance on Surviving Covid-19 and Beyond (ASCAB) and Senior Advocate of Nigeria (SAN), Mr Femi Falana, has urged the Federal Government to jettison the Import Parity Price model for petrol, insisting that it cannot reduce pump prices for Nigerians.

Reacting to the Federal Government’s recent announcement of a price modulation mechanism for Premium Motor Spirit (PMS), with a proposed ceiling of N1,350 per litre on ex-gantry/landing costs and a N66-per-litre discount at Nigerian National Petroleum Company Limited (NNPCL) retail outlets as part of a 30-day promotional programme, Falana questioned the initiative’s reach.

“Since the Nigerian National Petroleum Company Limited operates about 900 filling stations out of the total 22,681 registered filling stations nationwide, how will citizens benefit from the 30-day offer of discount?” he asked.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had stated that Nigeria had 22,681 registered filling stations nationwide.

Falana questioned the impact of the discount, noting that NNPCL operated only about 900 of those stations.

The SAN argued that despite being a leading oil-producing nation, Nigeria’s adoption of Import Parity Pricing meant that Nigerians paid international prices for petrol, as the model was based on the cost of importing the product.

The human rights lawyer urged the Federal Government to adopt Production Cost Pricing, a model based on the cost of crude oil production, refining, transportation and distribution within the domestic market.

In his words, “This method implies that the crude oil is produced and refined in the country. It is only the Production Cost Pricing method that can substantially reduce the price of petrol.”

Falana referenced petroleum engineer Professor Izielen Agbon, who said that under Production Cost Pricing, petrol could sell for between N435 and N687 per litre, based on domestic production costs and the prevailing exchange rate. He added that the Federal Government had yet to challenge Agbon’s claims.

According to Falana, Agbon’s position differed significantly from the solutions offered so far by President Bola Tinubu and leading opposition presidential candidates.

The SAN warned the Federal Government against behaving like proponents of the Structural Adjustment Programme (SAP), who claimed there was no alternative to the programme, stressing that alternatives existed within Nigeria’s current socio-economic circumstances.

“There is no economic or political justification for selling imported petrol to the Nigerian people at the international price. It is time that the Federal Government rejected the demand of the World Bank that Nigeria should continue to import PMS from overseas,” Falana said.