Petroleum Product Pricing Analysis

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The Petroleum Product Pricing Act and Regulation provides the legal framework for the setting of prices of petroleum, wherever this act is applied. In the Federal Government’s quality of being determined to achieve its aim and objectives to regulated the supply and distribution of petroleum products among others, National Assembly of the Federal Republic of Nigeria enacted the Petroleum Pricing Regulatory Agency Act 2003 referred to as ‘The PPPRA Act’ or ‘Act No. 8 of 2003’
The PPPRA Act established an agency known as Petroleum Products Pricing Regulatory Agency i.e., the Agency. The Agency is a body corporate with never ending succession and a common seal capable of suing and being sued in its corporate name. The Agency is an existing one …show more content…

To average the rise in petroleum products prices while ensuring reasonable returns to operators,
v. To exercise the role of middlemen as necessary for all stake holders in the sector.
PETROLEUM PRODUCT PRICING SINCE THE END OF ADMINISTERED PRICING MECHANISM
In April 2002 India put an end to the Administered Pricing Mechanism (APM) controlling the domestic price of petroleum products in India. Under the APM, product pricing were directly administered by India’s Central Government based on an opaque and complex ‘cost of operating capital plus’ formula.
Under the new regime, OMCs would be free to set retail products prices based on an import parity pricing formula under the supervision of a petroleum sector regulator. A

domestic refining and retail sector was also opened to private sector firms – leading to the disclosure of a notable private sector retailing presence in India consisting of firms such as Reliance. Because of the importance of LPG and Kerosene as cooking fuels to poorer series of India’s population, flat-rate subsidies funded from Government’s budget were renewed, and however these were to be phased out between 2005-2007 (they are yet to phased out). Under the new pricing regime, it was expected that retail price for petroleum products would fluctuate with changes in the price of India’s crude basket. International crude prices have risen sharply, retail prices for the products examined have increased slowly, but LPG and Kerosene prices have hardly increased …show more content…

With the continue rise in crude prices beginning in 2002, the Central Government increasingly looked to restrict the ability of OMCs to increase the prices, in order to protect the Indian consumers. By mid of 2004, the post APM model of product pricing had been effectively deserted, with the Central Government once again centrally giving permission to upward price revisions. Since 2004, the retail prices for petrol and diesel have been revised upward less than ten times by the Central Government, while LPG and Kerosene price remained effectively fixed. By conclusion, the private

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