NPA increases UPPF, BOST margins on fuel

The National Petroleum Authority (NPA) has directed Oil Marketing Companies (OMCs) and other players to increase the Unified Petroleum Price Fund (UPPF) and the Bulk Oil Storage and Transportation (BOST) margins on fuel from today, December 1, 2022.

A letter from the NPA seen by Joy Business instructed the OMCs to increase the UPPF margin up from 36 pesewas to 47 pesewas on every litre of Petrol and Diesel sold at the pumps. In addition, the UPPF for Kerosine, LPG and Premix fuel have all gone up by 11 pesewas.

According to the NPA, the increase is needed to ensure that, freight rates reflect current economic conditions in the country.

The UPPF is used to support the transportation of petroleum products around the country to ensure that price of the product is the same in every part of the country irrespective of the location.

The letter has also asked the various players to also increase the BOST margin by 2 pesewas.  The BOST margin for Petrol, Diesel and kerosene have all gone up by 2 pesewas.

This is the second time this year that NPA has increased the UPPF on the products.

Likely implications

The directive could force some of the OMCs to reverse the more than 5 per cent reduction in prices of petroleum recorded at the pumps recently.

By this, the directive could erode more of the margins of OMCs currently enjoyed.

In addition, some marketing firms that have not yet reduced prices could also be forced to rather increase prices.

Meanwhile, the NPA has not yet explained the reasons behind the directive for these margins to be increased.