After a private meeting with Vice President Kashim Shettima at the State House in Abuja, the NNPCL Group Chief Executive Officer, Mele Kyari, revealed to the media Why Fuel Price Increse To N617 Per Litre
With the liberalization of the oil industry, according to Mr. Kyari, market forces would occasionally drive up gasoline prices and occasionally drive them down.
“Our business has a marketing division. Depending on the conditions of the market, they modify pricing.
“This is actually what is going on; this is the significance of ensuring that the market controls itself so that prices will rise and occasionally fall as well. This is what we’ve observed, and this is actually how the market operates, he added.
He clarified that there is no supply problem because there is adequate petroleum product available for further distribution throughout the nation.
“You purchase the thing when you go to the market; when you arrive to the market, you sell it at the going market rates. Not at anyway related to supply. There are no supply problems here. The supply is abundant. The country has enough supplies for more than 32 days, he claimed.
Yes, I am aware that the market will be regulated by market forces.Sometimes prices will decrease, and other times they will increase. However, the supply will be stable, and I’m telling Nigerians that this is the appropriate course of action moving ahead so that we can modify pricing as market forces
“At the moment, I don’t have the specifics, but I am aware that our marketing division behaves exactly like any other company in our industry. I am aware that some businesses nowadays import petroleum goods. As a result, many of them are online.My coworker would no doubt vouch for this. People have begun to have faith in the market as market forces have begun to operate. People in the private sector import goods, but they will never be able to recoup their costs if they refuse to use market-reflective prices.
Effect of crude oil
Speaking at the same time, Farouk Ahmed, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), linked the price hike to the rise in the price of crude oil globally.
I informed you as a regulator that we would not be establishing pricing back in May. The market will decide for itself, and as you saw when the prices were released in early June, they were based on the cost of importation, other distribution logistics, and, of course, the importer’s profit margin.
“This market is unregulated and accessible to all players. When I was in Lagos yesterday, I noted that 56 marketing firms had filed for and been granted import permits.
Ten of them—that is, the third quarter—which is July, August, and September—have said they will provide. Prudent Energy, AYM Shafa, and Emadeb are some of the marks from which we have already received cargo.
Tomorrow, Emadeb Cargo will arrive.
He pointed out that the change assures that the market is open and that anybody may import as long as they follow the rules, particularly in terms of quality.
“However, with regard to pricing, as we are a regulator and do not participate in importation, we will not set a price cap. We are only a regulator; we are not a marketing firm.Therefore, when you claim market forces are at work, you essentially take the rising price of petroleum into account when making your purchases. The cost of petroleum was circling about $70 per barrel a few weeks ago. It currently hovers around $80 per barrel.
“Therefore, the product price is influenced by the price of oil. Because importers are importing, he explained, they base their prices on the cost of importing goods plus freight and other costs associated with local distribution.
The cost of gasoline at the pump increased earlier on Tuesday to N617 per litre at several NNPCL locations in Abuja and other regions of the nation.
The change occurs months after the oil industry authorized an increase in the national pump price of gasoline.
The abolition of gasoline subsidies was announced by President Bola Tinubu in his inauguration speech on May 29.
The Nigerian National Petroleum Company Limited (NNPCL) instructed its shops countrywide to sell petrol between N480 and N570 per litre as a result of the news, a price rise of more than 200 percent from the initial price below N200.
The spike instantly led to an increase in product and service prices as well as transportation costs.