Major Oil Marketers Association of Nigeria (MOMAN) says plans to fix the freight rate for Premium Motor Spirit (PMS) can hinder the downstream sector’s full deregulation.

Tunji Oyebanji, Chairman, MOMAN, said the move could also affect competitiveness among players in the industry’s value chain.

Mr. Oyebanji was reacting to the federal government’s plan to increase the PMS freight rate, also known as petrol, from N7.51 per litre to N9.11.

He said market forces should be allowed to determine any such increments.

Ahmed Bobboi, the Executive Secretary of Petroleum Equalisation Fund (PEF), had announced plans to raise the freight rate.

Mr. Bobboi spoke at the 21st Annual General Meeting of the National Association of Road Transport Owners (NARTO) in Abuja.

However, he said the government was waiting for feedback from the organised labour on the agreement reached on the planned increase in PMS prices 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 market forces should determine this,” Mr. Oyebanji said.

According to him, an increment in any part of the petroleum sector’s value-chain should be determined by economic parameters and consideration of its impact.

He argued that when the transporters knew there is a fixed price for their services, some 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 but 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. 

(NAN)