Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), addressed concerns about the increasing prices of Premium Motor Spirit (petrol) in Nigeria.
He reassured Nigerians that competition among major players in the oil sector would lead to a reduction in petrol prices, countering the recent upward trends that have caused panic in the country.
Following the discontinuation of petroleum subsidy, fuel queues reappeared at stations across the nation due to the recent hike in petrol pump prices.
The NNPC had adjusted the pump price of petrol to reflect market realities but did not disclose the new prices. Nevertheless, retail outlets in Lagos, Abuja, Ogun, and other states sold petrol at prices ranging from 600 to N800 per litre.
Talks between the Federal Government and organized labor regarding the removal of fuel subsidy ended in a deadlock. The parties failed to reach a consensus after oil marketers raised petrol pump prices to over N700 per litre from N195.
During an interview on Arise TV’s Morning Show, Kyari explained that the removal of subsidy would encourage new players to enter the market, promoting competition and phasing out monopoly. He emphasized that this would foster healthy competition, leading to a downward revision of petrol prices nationwide.
Kyari stated, “The removal of subsidy will attract new entrants to the market because oil marketing companies have been hesitant to enter due to the existing subsidy regime. With the market being regulated, oil marketing companies can import or buy locally produced petrol and sell it at retail prices.
“This will introduce competition, even with NNPC. According to the law, NNPC cannot control more than 30 percent of the market going forward. Once the market stabilizes, oil marketing companies will be able to participate.”
He added, “Competition will naturally arise, and the market will regulate itself. In a week or two, you will witness different prices as major players adopt different approaches. Competition will drive these changes downward, and increased efficiency will play a significant role.”
Regarding the price hikes by fuel stations despite holding subsidized stock, Kyari explained, “This is a typical stock management issue that applies to all commodities, not just petroleum.
“It could have been the opposite, with prices collapsing and those holding old stock forced to sell at lower prices to match market conditions.
“It’s not something unusual or alarming; it’s simply how stock management works. The prices at our stations reflect the current market conditions, and prices can decrease at any time as the market adjusts itself.”