The adjustment in petrol prices with market rates will promote competition and efficiency in the oil market and drop prices naturally, says Mele Kyari, group chief executive officer, of Nigerian National Petroleum Company Limited (NNPCL).
During an interview on Arise Television on Thursday, Kyari said the recent increase in fuel pump prices will lead to heightened market competition and attract more oil marketing companies to invest in Nigeria’s oil market, benefiting the economy.
According to Kyari, the prices we are seeing today at our station are the current market price of the commodity. “Prices in the market can go down at any time, and the market will adjust itself,” he said.
“They will be a new entrance. Now that the market regulates itself, oil marketers can actually import products and take them into the market and sell it at their commercial price. You will see competition.”
President Bola Tinubu on Monday during his inauguration announced that “subsidy is gone” sending the market into a tailspin as those who had the products quickly shut their pumps and long queues emerged across the nation.
Read also: Why Tinubu didn’t wait till June to implement Subsidy removal
Kyari added that when you have higher prices of commodities, you regulate your consumption and that means the volume of the product you are going to require will come down naturally. At least, my estimate is that probably about 30 percent of the volume of consumption will come down.
Kyari added that the NNPC uses the official foreign exchange rate as the rest of the Nigerians do. He said the foreign exchange rate will not also affect the price of fuel in the country, as the NNPC has always been subject to the official FX.
“As we speak today, NNPC uses the official exchange rate, which of course will now be subject to the stabilisation that will be created by the announcement of Mr President. We see this coming very soon and very shortly,” he said.
“Once that happens, everybody, including the NNPC will access the FX at the same rate, and of course, obviously when you have a change of this nature it is always a transition. You will see this happening- a gradual exit of the NNPC in the official exchange rate, and of course, ultimately, there will be a single market rate to which NNPC itself will be subject.”
Kyari added that there is no verifiable data to say the level of consumption in this country, but we know the evacuation from our depots, and that evacuation number will come down at least by 30 percent.
“If that happens, it also means a collateral decrease in the requirement of FX in the market. Therefore, the same source of FX that NNPC has access to, all the market will have access,” Kyari said.
“I know and I am aware of ongoing engagements to ensure that everyone has access to that single window market for the FX. Once that happens, you will not see any spiral, you will not see any change that is significant, it will not happen.”
