The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, sought to ease concerns on Thursday about the surging prices of Premium Motor Spirit, commonly known as petrol.
Kyari stated that the entry of new competitors in the oil sector will inevitably cause a drop in petrol prices, contrasting with the recent trends that have triggered panic across Nigeria.
The influx of Nigerians at fuel stations was due to the reported removal of the subsidy by the president.
On Wednesday, the NNPC announced an adjustment in the petrol pump price to reflect the current market price of N600 naira, though it did not provide specific new prices.
Many retail outlets in Lagos, Abuja, Ogun, and other states have since been selling petrol for between N600 and N800.
Negotiations between the Federal Government and organized labour over the subsidy removal came to a standstill on Wednesday, as they could not reach an agreement in light of the petrol pump price hike from N195 to over N700 per litre by oil marketers.
In an interview on Arise TV’s Morning Show, Kyari maintained that the subsidy removal would invite new market players, promoting competition and ending monopolistic practices.
This change, he argued, would lead to a price reduction in petrol across the nation.
Kyari explained, “The beauty of this (subsidy removal) is that there will be new entrants (into the market) because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.”
With the market now being deregulated, Kyari expects to see more competition, even with the NNPC, which legally cannot control more than 30% of the market.
“Competition will definitely come in and the market will regulate the prices itself… you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that. Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.”
As to why fuel stations increased their pump prices when they still have already subsidized products in stock, Kyari responded, “This is the reality of the market. It applies to every commodity and not just petroleum. This means that prices in the market can go down at any time and of course, the market will adjust itself.”