Mele Kyari, group chief executive officer of Nigerian National Petroleum Company Limited, allayed Nigerians’ concerns on Thursday over the country’s escalating prices for Premium Motor Spirit, also known as gasoline.
The head of NNPC predicted that competition between significant participants in the oil industry would drive down gasoline prices rather than the increasing trends that have sparked concern in the nation.
According to The Spectator, lines had formed again at gas stations around the nation after the price of gasoline recently increased due to the end of petroleum subsidies.
The NNPC announced earlier on Wednesday that it had changed the price of gasoline at the pump to reflect market conditions. However, the agency omitted to announce the updated petrol pricing.
However, a number of retail establishments in Lagos, Abuja, Ogun, and other states offered the item for between 600 and N800.
Additionally, discussions between the Federal Government and organized labor over the elimination of fuel subsidies came to a standstill on Wednesday due to their inability to come to an agreement in the wake of oil marketers’ increase in the price of gasoline at the pump to nearly N700 from N195 per litre.
In an interview with Arise TV’s Morning Show on Thursday, Kyari said the elimination of subsidies would permit new entrants into the market, a move that would help competition and gradually phase out monopoly.
According to him, doing so would ensure healthy competition, which would ultimately result in a review of the costs of gasoline at the pump across the nation that was more favorable.
“The beauty of this (subsidy removal) is that there will be new entrants (into the market),” he said, “because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.”
“And that subsidy regime doesn’t have a guarantee of repayment back to the those who provide the product at subsidise price and now that the market is being regulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell it at its retail price.
Due to the fact that NNPC is legally limited to no more than 30% of the market going forward, competition will exist even with NNPC if the market stabilizes and oil marketing businesses are allowed to enter.
“Competition will definitely come in and the market will regulate the prices itself. Therefore, this is just an instantaneous price and within a week or two, you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that. Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.
“As soon as competition comes in, people will become more efficient in their depots, in managing their trucks and in managing their fuel stations so that people can come to their stations. And it is showing already, right now, you will see motorists going to stations where they can have price differences, so this will regulate the market and on its own, the price will come down naturally and I don’t see any doubt about this.”
On why fuel stations hiked their pump price when they still have in stock already subsidized products, the NNPL boss said “This is the reality of the market. It applies to every commodity and not just petroleum.”
He added, “It could have been the other way round, prices could have collapsed downwards and those holding the old stock will have to sell at lower prices to arrive at market condition.
“It is not something serious or strange, this is a stock management issue and it is very typical, no one can do anything different about this.
“The prices we are seeing today at our station are the current price of the commodity. This means that prices in the market can go down at any time and of course, the market will adjust itself.”
