The Nigerian National Petroleum Company Ltd. has attributed the increase in the price of Premium Motor Spirit (PMS), also known as petrol, to market realities.
The company’s Group Chief Executive Officer, Malam Mele Kyari, stated this in an interview with newsmen shortly after a private meeting with the Vice President, Kashim Shettima, at the Presidential Villa on Tuesday in Abuja.
Kyari explained that the increase in the price of PMS has nothing to do with supply issues, adding that there is a robust supply of the product in the country.
"I don’t have the details at this moment. You know we have the Marketing Wing of the company; they adjust prices depending on market realities.
"And this is the meaning of making sure that the market regulates itself so that prices will go up and sometimes they will come down also, and this is really what we are seeing in reality; this is how the market works.
"There is no supply issue completely when you go to the market, you buy the product, you come to the market, and you sell it at the prevailing market price. There is 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; that’s not a problem. What I know is that market forces will regulate the market; prices will go down sometimes and sometimes they will go up, but there will be stability in supply.
He assured Nigerians that the policy was the best way for the country to go forward.
"And I am also assuring Nigerians that this is the best way to go forward so that we can adjust prices when the market comes.
"I know that a number of companies have imported petroleum products, so many of them are online. Market forces have started to play; people have confidence in the market, and people in the private sector are now importing products.
"And there is no way they can recover their costs if they cannot take market-reflective costs," Kyari said.
On his part, Alhaji Farouk Ahmed, Chief Executive Officer, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said the authority doesn’t set the price of the product, but the market determines itself.
"As a regulator, you know I told you back in May that we are not going to be setting prices; the market will determine itself, and as you saw back in early June when prices came out, they were based on the cost of importation plus other logistics of distribution and of course the profit margin of the importer.
"This market is deregulated and open to all participants. As I mentioned also yesterday (Monday), when I was in Lagos, we have about 56 marketing companies that have applied for and obtained licences to import.
"Out of those 10, 10 of them have indicated they will supply within the third quarter, which is July, August, and September. And out of those, we have already received some cargo from some of these Marketers.
Prudent Energy, AYM Shafa, and Emadeb Cargo are arriving tomorrow (Wednesday). So this is like 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."
He insisted that the authority as a regulator would not put a cap on the price because it was not part of those importing the product.
"But 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 means is that you can see the price of crude oil going up. A couple of weeks ago, it was recovering around 70 dollars per barrel; now it is around 80 dollars per barrel.
"So of course the crude price also drives the product price, you know, because the imposters are importing; they are basing it on the course of importation plus other cost elements in terms of local distribution."