The Nigerian National Petroleum Company Limited (NNPCL) says the prices of fuel will come down following the removal of fuel subsidies.
Mele Kyari, the Group Chief Executive Officer (GCEO) of NNPCL, made this statement during an interview on Arise Television today, June 1. Kyari emphasized that the adjustment, aligning pump prices with market rates, will promote competition and efficiency in the industry.
He said that many oil marketing companies have previously stayed away from the Nigerian market because of the fuel subsidy regime. But now that prices will reflect the market realities, more companies will be willing to invest in Nigeria’s oil market.
“The beauty is that there will be new entrants into the market, their reluctance to come into the market all along was the subsidy regime and that regime does not guarantee repayments back to those who provided the product at subsidized prices. Now that the market regulates itself, oil marketing companies can actually import products or produce locally. They can take the product into the market, sell it and get their money back.”
Kyari said that by law, NNPCL cannot do more than 30% of the market going forward. He highlighted the fact that as soon as the market stabilizes, oil marketing companies are able to come in.
Then the market will regulate itself. He also said Nigerians will continue to see price adjustments as the market dictates and all the inefficiency burdens in the system will reduce because of competition.
While speaking to the fact that a provision was made in the 2023 budget that the fuel subsidy regime will exist until the end of June 2023, Kyari said the financing was just not available any longer. He said, “You can make a provision in the budget, but you must finance it, and that financing part is absent. In 2022 when that provision was made, nothing was paid to the NNPC to provide those subsidies. The implication is that you have to take the cash flow of the NNPC to continue to sustain the regime, this has become a daunting task for the NNPC.”
According to him, the prices Nigerians are seeing today are reflective of the current market price of the commodity. What this means is that prices in the market can go down at any time and the market will adjust itself.
Kyari pointed out that the prices released on May 31, are not fixed prices and the prices were fixed based on costs by location and existing realities.
