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NNPC predicts crash in fuel prices despite removal of subsidies
Mele Kyari, the group chief executive officer of the Nigerian National Petroleum Company Limited (NNPC), on Thursday, tried to allay worries over the rising cost of premium motor spirit, also known as petrol.
Kyari asserted that, in contrast to current patterns that have caused alarm throughout Nigeria, the introduction of new rivals in the oil sector will certainly result in a decrease in petrol prices.
ENIGERIA has previously stated that the increase of Nigerians at petrol stations was caused by the allegedly removed subsidy.
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On Wednesday, the NNPC announced an adjustment in the petrol pump price to reflect current market conditions, though it did not provide specific new prices.
Many retail outlets in Lagos, Abuja, Ogun, and other states have since been selling petrol for between N600 and N800.
On Wednesday, negotiations between the Federal Government and organised labour over the elimination of subsidies came to a halt because they were unable to come to an agreement in light of the oil marketers’ increase in the price of gasoline from N195 to almost N700 per litre.
According to Kyari, the withdrawal of subsidies will bring in new market actors, foster competition, and put an end to monopolistic practises, according to an interview with Arise TV’s Morning Show.
He said that this modification would result in lower petrol prices across the country.
Kyari explained, “The beauty of this (subsidy removal) is that there will be new entrants (into the market) because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.”
With the market now being deregulated, Kyari expects to see more competition, even with the NNPC, which legally cannot control more than 30% of the market.
“Competition will definitely come in and the market will regulate the prices itself… you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that. Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.”
