Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company Limited, has urged Nigerians to brace up for market forces regulation of fuel prices as a fallout of fuel subsidy removal.
Kyari, who spoke against the backdrop of the latest increase in petrol price from N537 to N617 by NNPCL filling stations, said on Tuesday that “the adjustment is part of the market realities”.
Kyari told journalists at the Presidential Villa, Abuja that the marketing wing of the company adjusts prices based 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 how the market works,” he said.
The hike in petrol prices by NNPCL sparked panic buying and triggered the return of queues in filling stations. Transport fares also increased
Kyari however warned against panic buying as he revealed that there is enough supply of the product.
He said: “There is no supply issue completely. 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 robust supply. We have over 32 days of supply in the country.
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“What I know is that the market forces will continue to 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 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 online. 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 costs.”
Farouk Ahmed, CEO of Nigerian Midstream and Downstream Petroleum Regulatory Authority, while also speaking on the issue, revealed that the price of crude oil has risen to $80 per barrel, a situation that led to the fuel price increase.
He said: “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.
“This market is deregulated; it is open to all participants. As I mentioned also 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. So, this is just an encouragement to see that the market is liberated and everyone is free to import so long as you are working within the framework, especially in terms of quality.
“But back to the issue of 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.”
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