By Harry Awurumibe, Editor, Abuja Bureau
Nigerians appear to be in for a rough ride as the fuel price increase occasioned by subsidy removal appear unabating just as the Presidency has summoned the Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari to Aso Rock Villa, Abuja on Tuesday where he met with Vice President Kashim Shettima.
PROMPT NEWS reports that on Tuesday morning, Abuja residents woke up to a further price adjustment as the NNPC mega stations adjusted Premium Motor Spirit (PMS) pump price from N540 per litre to N617 per litre.
But speaking after a visit to the Vice President in Abuja, the NNPCL boss said price of products are currently being determined by market forces.
Kyari, who could not give concrete reasons for the increase, maintained that the NNPC has thirty-two day supply and that the market is regulating itself.
Said he: “No. There is no supply issue completely. When you go to the market, you buy the product; you come to the market you sell it 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”
Asked what assurances he is giving to Nigerians in addressing the situation, Kyari 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”.
Speaking further he said: “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. I’m sure my colleague would confirm this. 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.”
Also speaking after the closed doors meeting with the Vice President, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Mallam Farouk Ahmed, said crude price equally drives product price”.
On what does this mean to average Nigerian after the NNPCL GMD just mentioned that market forces are in play concerning the pump price increases, Ahmed said NMDPRA had earlier said that it will not be setting prices of PMS.
Said he: “As a regulator, I told you back in May that we are not going to be setting price. 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 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”.
Speaking further 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”.