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.
Propolitics says that lines have formed again at gas stations around the nation as a result of the recent increase in the price of gasoline at the pump brought on by 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.
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.
As a result, competition will exist even with NNPC. Furthermore, NNPC is prohibited from controlling more than 30% of the market going forward by law. Oil marketing corporations might enter the market as soon as it stabilizes.
“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.”
The NNPL boss responded, “This is the reality of the market,” when asked why gas stations increased their pump price while they still had in store products that had already been given subsidies. Not just petroleum, but every commodity is covered.
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.”
