Fuel prices will decrease, According to NNPC.

Also Read

 

Mele Kyari, group chief executive officer of Nigerian National Petroleum Corporation Limited, allayed Nigerians' concerns on Thursday over the country's escalating prices for Premium Motor Spirit, also known as gasoline.

The head of NNPC predicted that competition between significant participants in the oil industry would drive down gasoline prices rather than the increasing trends that have sparked concern in the nation.

Emmynet24 Reports that lines have formed again at gas stations across the nation as a result of the recent hike in the price of gasoline at the pump brought on by the end of petroleum subsidies.

The NNPC announced earlier on Wednesday that it had changed the price of gasoline at the pump to reflect market conditions. However, the agency omitted to announce the updated petrol pricing.

Nonetheless, a number of retail establishments in Lagos, Abuja, Ogun, and other states offered the item for between 600 and N800.

Additionally, discussions between the Federal Government and organized labor over the elimination of fuel subsidies came to a standstill on Wednesday due to their inability to come to an agreement in the wake of oil marketers' increase in the price of gasoline at the pump to over N700 from N195 per litre.

In an interview with Arise TV's Morning Show on Thursday, Kyari said the elimination of subsidies would permit new entrants into the market, a move that would help competition and gradually phase out monopoly.

According to him, doing so would ensure healthy competition, which would ultimately result in a review of the costs of gasoline at the pump across the nation that was more favorable.

"The beauty of this (subsidy elimination) is that there will be new entrants (into the market)," he said, "because oil marketing businesses' reluctance to come into the market all along is the very fact of the subsidy regime that is in existence."

And now that the market is being regulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell it at its retail price. This is because the subsidy regime doesn't have a guarantee of repayment back to the those who provide the product at subsidise price.

As a result, competition will exist even with NNPC. Furthermore, NNPC is prohibited from controlling more than 30% of the market going forward by law. Oil marketing corporations might enter the market as soon as it stabilizes.

"There will undoubtedly be competition, and the market will control pricing on its own. As a result, this is merely an instantaneous price, and within a week or two, you will continue to observe varying prices due to varied strategies employed by big players, corporations, and the competitive environment. In the end, you would see adjustments that were downward, and it is extremely likely that this was due to efficiency.

"As soon as there is competition, people will become more effective in managing their depots, their trucks, and their gas stations so that customers may visit their stations. The fact that drivers are already driving to stations where they may find pricing discrepancies demonstrates how the market will be regulated, and I don't think there's any doubt that the price will drop naturally on its own.

The NNPL boss responded, "This is the reality of the market," when asked why gas stations increased their pump price while they still had in store products that had already been given subsidies. Not just petroleum, but every commodity is covered.

"It could have gone either way, prices could have fallen and people holding the old shares would have had to sell at lower prices to reach market conditions," he continued.

"This is a stock management issue, which is fairly common, and there is nothing unusual or serious about it; nobody can change it.

"The prices we are seeing at our station right now reflect the commodity's current price. This implies that market prices may decrease at any time, and the market will naturally correct itself.

Author
Emmanuel Ukaoha has 4years Experience in Journalism, he is also a Web Developer and an SEO Expert. You Can also Connect with him on Instagram and Linkedln.