The Nigerian National Petroleum Company Limited (NNPCL) on Tuesday attributed the rise in the petroleum pump prices in the country to ‘market forces’.
The NNPCL Group Chief Executive Officer, Mele Kyari, disclosed this while speaking to journalists after a closed-door meeting with Vice President Kashim Shettima at the State House in Abuja.
Mr Kyari said with the deregulation of the oil sector, market realities will force the price of petrol up sometimes and at other times force it down.
“We have the marketing wing of our company. They adjust prices depending on the market realities.
“This is really what is happening; this is the meaning of making sure that the market regulates itself so that prices will go up and sometimes they will come down also. This is what we have seen, and in reality, this is what (how) the market works,” he said.
He explained that there is no supply issue as there are enough petroleum products for onward distribution across the country.
“When you go to the market, you buy the product; you come to the market, you sell it at the prevailing market prices. Nothing to do with supply. We don’t have supply issues. There is a robust supply. We have over 32 days of supply in the country,” he said.
“Yes, what I know is that the market forces will regulate the market.
“Prices will go down sometimes; sometimes, it will go up. But there will be stability of supply, and I’m also assuring Nigerians that this is the best way to go forward so that we can adjust prices when market forces come to play.
“I don’t have the details at this moment, but I know that our marketing wing acts just like every other company in this business. I know that a number of companies have imported petroleum products today. So, many of them are on line.
“I’m sure my colleague would confirm this. Market forces have started to play; people have started having confidence in the market. Private sector people are importing products, but there is no way they can recover their cost if they cannot take market reflective cost.”
Crude oil effect
Also speaking, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, attributed the rise in price to the global crude oil price increase.
“As a regulator, I told you back in May that we are not going to be setting prices. The market will determine itself, and as you saw back in early June when prices came out, it was based on the cost of importation plus other logistics of distribution and, of course, the profit margin by the importer,” Mr Ahmed said.
“This market is deregulated; it is open to all participants. As I mentioned yesterday, when I was in Lagos, we have about 56 marketing companies that applied and obtained licenses to import.
“Out of those, 10 of them have indicated to supply within the third quarter, which is July, August, September. Already, we received some cargoes from these markers: Prudent Energy, AYM Shafa and Emadeb. Emadeb Cargo is arriving tomorrow.”
He noted that the development ensures that the market is liberated and everyone is free to import as long as they work within the framework, especially in terms of quality.
“But to pricing, as a regulator, we are not going to put a cap on the price because we are not part of those importing. We are not a marketing company; we are just a regulator.
“So, when you say market forces are working, basically, what it is that you buy, you consider the price of crude going up. A couple of weeks ago, the price of crude was hovering around $70/barrel. Now it’s hovering around $80/barrel.
“So, the crude price also drives the product price. You know, because the importers are importing, they are basing it on the cost of importation plus the freight and other cost elements in terms of local distribution,” he said.
Earlier on Tuesday, petroleum pump prices rose to N617 per litre at various outlets of the NNPCL in Abuja and other parts of the country.
The development comes months after the oil company approved an upward review in the pump price of petroleum nationwide.
President Bola Tinubu announced the removal of fuel subsidies in his inaugural address on 29 May.
Following the announcement, the Nigerian National Petroleum Company Limited (NNPCL) directed its outlets nationwide to sell fuel between N480 and N570 per litre, an over 200 per cent increase from the initial price below N200.
The hike immediately triggered an increase in transportation fares and prices of goods and services.