The Nigerian Midstream/Downstream Petroleum Regulatory Agency (NMDPRA) on Tuesday maintained its usual silence as marketers of petroleum products again raised the price of premium motor spirit (PMS), popularly called petrol, by another 14.3 percent.
Nigerians woke up on Tuesday to see the retail pump price of petrol at all Nigerian National Petroleum Company Limited (NNPCL) filling stations across the country adjusted from an average of N540 per litre since the beginning of June this year to between N617 per litre.
It was the second time in a space of two months for the price of the commodity to be adjusted upwards since last June since President Bola Tinubu announced the removal of subsidy from the pricing template of petrol in the country.
The announcement saw the price of petrol being increased by almost 200 percent, from N197 per litre to an average of N540 per litre.
Without providing details on how the increment was arrived at, the NMDPRA, which is the controlling pricing regulatory authority in the downstream sector of the petroleum industry, after days of silence, said the reoval of subsidy on petrol meant the take off of the deregulation policy, which would allow market forces to determine prices at the pump.
On Tuesday, the price regulatory agency also kept silence over the new price regime, allowing the NNPCL to proffer reasons why the latest price adjustment was effected.
In a chat with journalists at the end of a closed-door meeting with Vice President Kashim Shettima at the State House in Abuja, the Group Chief Executive Officer of the NNPCL, Mele Kyari, attributed the rise in the petrol pump price to N617 per litre in its retail outlets to ‘market forces’.
“In the marketplace, you buy the product and come to the market to sell at the prevailing market prices. Nothing to do with supply. We don’t have supply issues,” Kyari said.
He said with the deregulation of the downstream sector of the petroleum industry, market realities will force the price of petrol up sometimes, and at other times down.
“We have the marketing wing of our company. They adjust prices depending on the market realities. This is really what is happening. This is the meaning of making sure the market regulates itself, so that prices will go up and sometimes will come down. This is what we have seen, and in reality, this is (how) the market works,” he said.
However, those familiar with how the markets works criticised the explanation by the NNPCL Chief, pointing out that the inability to provide the statistics on the volume of demand and supply of petrol, to show the interplay of each on the other to arrive at the price adjustment tend to raise suspicion on the market scenario.
But, Kyari insisted there were no petrol supply issues, as there was sufficient stock of the commodity for distribution across the country to meet the demand by consumers.
“We don’t have supply issues. There is a robust stock to supply. We have over 32 days of sufficiency of supply in different full depots across the country. I believe there will be stability of supply. Also, let me assure Nigerians that this is the best way to go forward so that we can adjust prices when market forces come to play,” he said.
Also speaking, the Chief Executive Officer of the NMDPRA, Farouk Ahmed, blamed the rise in price to the global crude oil price increase.
“As a regulator, I said in May that we are not going to be setting prices. The market will determine itself. In early June when prices came out, it was based on the cost of importation, plus other logistics for distribution and the profit margin by the importer,” Ahmed said.
“This market is deregulated. It is open to all participants. At the moment, we have about 56 marketing companies that applied and obtained licenses to import petroleum product.
“10 of them have indicated to supply within the third quarter – July, August, September. Already, we received some cargoes from these markers: Prudent Energy, AYM Shafa and Emadeb. Emadeb Cargo is arriving soon.”
He noted that the development ensures that the market is liberated and everyone is free to import as long as they work within the framework, especially in terms of quality.
“But for 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.
“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,” he said.
