Market Forces Responsible for Fuel Hike, Says Kyari
The Group Chief Executive Officer (GCEO) of NNPC, Mele Kyari says market forces were responsible for the increase in pump price of petrol, assuring Nigerians that there was no shortage in product supply.
Kyari blamed market forces for the increase in pump price of petrol from N537 to N615 per litre.
Speaking with newsmen yesterday after meeting with Vice President Kashim Shettima at the State House, Abuja, the NNPC boss explained that the increase was not based on short supply of fuel.
According to him, “They are just prices depending on the market realities. This is the meaning of making sure that the market regulates itself. Prices will go up and sometimes they will come down also.
“No, there is no supply issue. It is not a supply issue. When you go to the market, you buy the product, you come to the market and sell it at its prevailing market price. It has nothing to do with supply. We don’t have supply issues.
“We have a robust supply. We’ve had over 32 days of supply in the country. That’s not a problem.”
Also Read: Fuel Hike: ‘Nigerians are Being Deceived, Punished Unnecessarily” — NLC
Kyari declared that market forces would continue to regulate price, saying fuel prices are bound to fluctuate from time to time.
He said, “Yes, 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 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 don’t have the details this moment, but 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 on line. 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 cost.”
Commenting on the petrol price issue also, Chief Executive Officer, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, said the fuel price increase stemmed from rising crude prices. Ahmedalso cited changes in freight prices alongside other ancillary costs importers incur during distribution.
He said, “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.”
Ahmed also disclosed that 10 out of 56 oil marketing companies recently licenced to import petrol would start supplying effective from this month through September. This move, he said, would encourage the liberalisation of the petroleum market for all to import within the framework in terms of quality.
According to him, “Ten out of the 56 oil marketing companies 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 to 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.”
However, Nigerian Employers’ Consultative Association (NECA) has kicked against the upward adjustment of the petrol pump price. NECA appealed to the federal government to lessen the burden on citizens brought about by harsh economic decisions.
Kicking against the upward adjustment of the petrol pump price from N500 to N617, Director General of NECA, Mr. Adewale-Smatt Oyerinde, expressed dissatisfaction with the increase.
Oyerinde said it was quite unfortunate and worrisome that the upward review in the price of petroleum was coming at a period when businesses and Nigerians were facing challenges amid rising inflation that was eating away consumers disposable income and talk about impending increase in electricity tariff.
Oyerinde said, “The petrol price going up adds to the burden that not only Nigerians are facing but also the organised businesses. Once the disposable income goes down the ability of average Nigerians to purchase is impaired. And once they cannot purchase, businesses cannot produce or cannot sell what they have produced.
“It is a worrisome trend and I want to call on the government to take a dispassionate look at all these issues. We will reiterate our position that government should not kill those that it is trying to save.
“We are kicking against the price. We cannot continue to be saying that Nigerians should sacrifice, when we are not seeing corresponding sacrificial activities on the side of government.
“We are against this new price adjustment. Let the market take the lead, that is the expectation and not the ‘deregulated regulation’ that we are currently seeing. It is a bit confusing and businesses and Nigerians need clarity on the direction that we are actually going.”
