Regulators Response to Business Continuity (Oil & Gas and Energy Sector)
The importance of the oil and gas sector cannot be over-emphasised with Nigeria being a major oil-producing country deriving a chunk of its foreign exchange earnings from the sale of crude.
The current shave in oil prices has far-reaching implications on major economic activities in the country. The availability of petroleum and allied products for local consumption, sustained crude production and price regulation, skilled labour mobility have all come to fore in the consideration of the impact of the COVID-19. Industry regulators are responding to these challenges with strategies to ensure some stability and profitability in the face of the challenges posed to the sector.
PETROLEUM PRICE REGULATORY AGENCY
The Petroleum Price Regulatory Agency under the Ministry of Petroleum Resources announced the introduction of a price regulatory regime for petroleum products which saw a reduction in the price of premium motor spirits (PMS) from N153 to N123 per litre for the month of April 2020. This followed the Minister of State for Petroleum’s announcement of the introduction of a monthly price regime which will be reflective of the actual cost and landing price of petroleum products in the international market, signalling the final removal of fuel subsidy.
For the month of May 2020, the recommended retail price was reduced from N123 to N112 naira. The challenge of compliance is the next concern, as many retailers insist that the monthly pricing regime does not factor the reality of the Covid-19 pandemic. This is because some retailers maintain stock which they are unable to exhaust within a monthly calendar period due to the recent restrictions in human or vehicular movements and closure of businesses in a 5-week lockdown of major cities as part of measures introduced to flatten the curve of the spread of the virus. However, with the gradual ease of the movement restrictions, it is expected that the retailers will comply with this pricing regime, and the regulatory agencies like the Department of Petroleum Resources (a sister agency to the PPRA) will be able to enforce the pricing regime, while ensuring the availability of products for consumption purposes across the country.