Market Forces Responsible For Rising Petrol Pump Prices – Kyari

Kyari says market forces are responsible for the rising petrol pump prices in Nigeria.

Glamtush reports that The Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, says market forces are responsible for the rising petrol pump prices of Premium Motor Spirit (PMS) known as petrol.

Kyari spoke on Tuesday afternoon after a meeting with Vice President Kashim Shettima at Aso Rock, Abuja.

He said with deregulation of the oil sector, market realities will force the prices of petrol up sometimes and at other times force prices down.

The NNPCL boss said the increase in the price per litre of petrol from over N500 to N617 is not a supply issue, assuring Nigerians that the country has “robust supply” of the vital commodity.

Kyari said Nigeria has over 32 days of supply and not short of petrol.

He said the marketing team of the NNPCL is responsible for price adjustment and that the team “adjust prices depending on market realities.”

He said, “This is really what is happening; this is making sure that the market regulates itself so that the prices will go up and sometimes, it will come down also.”

Kyari assured Nigerians that the country is not in short supply of the essential commodity, adding that the rising price of petrol has nothing to do with supply difficulties.

“There is no supply issue; when you go to the market, you buy the product. You come to the market and sell it at the prevailing market prices, nothing to do with supply issues.

“We have robust supply; we have over 32 days of supply within the country,” he said.

On his message to Nigerians lamenting the skyrocketing prices of petrol, the NNPCL boss said allowing market realities to determine the prices of petrol is the way to go.

“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. I am also assuring Nigerians that this is the best way to go forward so that we can adjust prices,” he said.

Also, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, who addressed reporters after Kyari, corroborated the NNPCL boss’ position on market forces.

He also mentioned that changes in freight costs and other miscellaneous expenses that importers encounter during distribution contribute to price changes.

Ahmed said, “Basically, what we’re seeing is the effect of market forces. You can see that crude oil prices have been on the rise. Just a week ago, crude oil prices hovered around $70 per barrel, but now it’s surpassed $80 per barrel. So naturally, these prices also influence the cost of the product.”

Tuesday’s development was confirmed by independent oil marketers, who noted that price changes by NNPCL typically indicate a rise in the pump price of petrol, given that NNPCL remains the primary petrol importer in Nigeria.

“This is because NNPCL is still the major importer of petrol into Nigeria currently, though other marketers are gradually importing the commodity.

“The price this (Tuesday) morning at some NNPCL stations is N617/litre,” the Secretary of the Independent Petroleum Marketers Association of Nigeria, Abuja-Suleja, Mohammed Shuaibu said.

No Respite, Queues Resurface

There seemed to be no respite for Nigerians after President Bola Tinubu announced the removal of petrol subsidy in his inaugural speech on May 29, 2023.

With the announcement, the pump price of a litre of petrol rose from N184 to N500. About two months later, the price jumped from N500 to over N617 on Tuesday, July 18, 2023, eliciting anger and criticisms from economically stranded citizens.

Fuel queues have immediately resurfaced in Lagos, Abuja, Port Harcourt and other cities across the country, with vehicle owners engaging in panic buying at the new rate of over N617 per litre, fearing that the price might go up again.

The unprecedented fuel prices come amid the unification of the foreign exchange rates by the Tinubu administration as well as rising inflation rates which the National Bureau of Statistics said hit 22.79% in June from the 22.41% recorded in May 2023.

The report also showed that food inflation spiked to 25.25% on a year-on-year basis which is higher than the 20.60% recorded in June 2022.

Meanwhile, the NMDPRA has said that oil marketers have commenced the importation of petrol.

The Tinubu government also said it planned to disburse N500 billion as palliative to cushion the effect of the skyrocketing fuel prices and food inflation. The government planned to give N8,000 to 12 million households within six months, a move that has been rejected by Organised Labour and rights activists.