Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, sought to reassure Nigerians regarding the increasing prices of petrol, commonly known as Premium Motor Spirit, throughout the nation. Addressing the concerns, he emphasized that competition among key players in the oil industry would exert downward pressure on petrol prices, countering the current upward trends that have triggered anxiety among the population.
Fuel stations across the country witnessed a resurgence of queues as a result of the recent increase in petrol prices, which occurred due to the discontinuation of petroleum subsidy.
The Nigerian National Petroleum Corporation (NNPC) announced on Wednesday that it had adjusted the petrol pump price to align with market realities. However, the specific new prices were not disclosed by the agency.
Nonetheless, numerous retail outlets in Lagos, Abuja, Ogun, and other states sold petrol at prices ranging from N600 to N800.
Furthermore, discussions between the Federal Government and organized labor regarding the removal of fuel subsidy ended without a resolution on Wednesday. This was due to the disagreement arising from the hike in petrol pump prices, which rose to over N700 per litre from the previous N195 per litre set by oil marketers.
During an interview on Arise TV’s Morning Show on Thursday, Mele Kyari expressed that the removal of subsidy would facilitate the entry of new competitors into the market. He believed this move would promote competition and gradually eliminate monopolistic practices.
He stated that this measure would foster healthy competition, resulting in a reduction of petroleum pump prices nationwide.
He explained, “The advantage of removing the subsidy is that it will attract new players to the market. The reason oil marketing companies have been hesitant to enter the market is due to the existing subsidy system.”He stated, “Moreover, the subsidy system does not guarantee repayment to those who provide the product at subsidized prices. However, now that the market is being regulated, oil marketing companies have the opportunity to import or purchase locally produced products and sell them at retail prices.”
He further explained, “As a result, we will witness competition, even from the NNPC. According to the law, going forward, the NNPC is limited to a maximum of 30 percent market share. Once the market stabilizes, oil marketing companies will be able to enter.”
He continued, “Competition will inevitably arise, leading to self-regulation of prices in the market. Therefore, the current price is only temporary, and within a week or two, you will observe different prices due to the diverse strategies employed by major players. Competition will govern this process, ultimately resulting in downward price adjustments. This is highly likely due to increased efficiency.”
“As competition intensifies, stakeholders will strive for efficiency in their depots, truck management, and fuel stations to attract customers. We are already witnessing motorists choosing stations with price differences. This self-regulation will naturally lead to price reductions, and I have no doubt about it.”
Regarding the hike in pump prices despite having subsidized products in stock, the NNPC boss stated, “This is the reality of the market. It applies to every commodity, not just petroleum.”He further commented, “Alternatively, the situation could have been reversed, with prices plummeting and those holding old stock being forced to sell at lower prices to align with market conditions.”
“This is a typical issue related to stock management, and it is neither serious nor unusual. There is nothing that can be done differently in this regard.”
“The prices currently observed at our stations reflect the present market conditions. It signifies that prices in the market can decrease at any given time, and naturally, the market will make the necessary adjustments.”
