By Emma Nnadozie, Omeiza Ajayi & Juliet Umeh, LAGOS
Group Chief Executive Officer of Nigerian National Petroleum Company Limited, NNPCL, Mele Kyari, said yesterday that the present high cost of petrol will crash in no distant time, allaying the fears of Nigerians about the development.
It will be recalled that the company came up with a new template which fixed the price of the product at between N488 and N557 per litre across the country.
He gave the assurance in an interview on Arise TV’s Morning Show programme monitored in
Kyari spoke on a day Amnesty International warned against the increased poverty removal of petrol subsidy would cause in
the country and asked the Federal Government to urgently come up with measures to mitigate the debilitating effects of the removal.
The NNPC boss said competition among major players in the oil sector will force down the price of the product, against the upward trends that had caused panic in the country. He said the removal of the subsidy will allow new This, he claimed, would ensure healthy competition which would ultimately lead to a
downward review of pump prices of petrol across the country. Kyari’s words: “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.
“That subsidy regime doesn’t have a guarantee of repayment back to those who
provide the product at a subsidised price and now that the market is being deregulated, 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 at its retail price.
‘’Therefore, you will see competition, even with NNPC. And by the way, by law, NNPC cannot do more than 30 per cent of the market going forward. As soon as the market stabilises, oil marketing companies are able to come in.
“Competition will definitely come in and the market will regulate the prices itself. Therefore, this is just an instantaneous price and within a week or two, 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.
As soon as competition comes in, people will become more efficient in their depots, in managing their trucks and in managing their fuel stations so that people can come to their stations.
‘’It is showing already. Right now, you will see motorists going to stations where they can have price differences, so this will regulate the market and on its own, the price will come down naturally anyone I don’t see any doubt about this.”
On why fuel stations hiked their pump price when they still had in stock already subsidised products, the NNPL boss said: “This is the reality of the market. It applies to every commodity and not just petroleum.
“It could have been the other way round, prices could have collapsed downwards and those
holding the old stock will have to sell at lower prices to arrive at market condition.
“It is not something serious or strange, this is a stock management issue
and it is very typical, no one can do anything different about this.
“The prices we are seeing today at our stations are the current price of the
commodity. This means that prices in the market can go down at any time and of course, the market
will adjust itself.”
Palliatives coming soon, NNPC GMD assures Nigerians
Meanwhile, rising from a meeting with the national chairman of All Progressives Congress, APC, Senator Abdullahi Adamu, at the party
secretariat in Abuja yesterday, Kyari disclosed plans by President Bola Tinubu to roll out palliatives to Nigerians to cushion the effect of the sudden removal of fuel subsidy.
According to him, one of the country’s four moribund refineries will come back on stream this
year, while another one will be revitalized next year until all of them are put in order.
He said: “There is a gradual process now of making a flexible and single foreign exchange regime. Everyone will be able to have access to foreign exchange and there is a transition going on now and NNPC cannot continue to be the sole importer. We know that this is going to vanish and the market will stabilize this.
“There is an ongoing process of rehabilitation and one of the refineries
will come on stream this year. The second will come on stream next year and the third will come in
“Of course, it is very obvious that we can no longer afford it. Subsidy bills have piled up. The country is not able to settle NNPC for the money we are spending on subsidy.
Therefore, pricing petroleum product in the market is the right thing to do at this time. We believe this will benefit the country in the long run.
“I am aware that Mr President has directed some engagement and some palliatives will be put in place. And I am very
sure this will happen.” Kyari said while there was subsidy in 2022, not a single naira was provided
for the purpose of financing the subsidy in 2023.
“Ultimately, while we held back our fiscal obligations, we still have a net balance of over N2.8 trillion the federation should have given back to the NNPC. For any company, when you have a negative of N2.8 trillion, there is no company in the whole of Africa that will lend to you. You cannot have receivables.
“The provision of subsidy is there but absolutely, there is no funding for it. It means it is only on paper. So, it doesn’t exist. The conversation today is not really about when you are taking off subsidy.
‘’We no longer can bear it because if we continue, we will run into defaults and the defaults of NNPC is the default of Nigeria. Once NNPC goes into defaults and illiquidity, it affects every borrowing done by the country, even the sub-nationals. Your lenders will come back to you and say your country can no longer pay.
“The only way you can stop this is to stop this conversation around subsidy. When Mr President announced that subsidy is gone, in 24 hours the bond market appreciated. It is nothing else other than the statement around subsidy and balancing of the apex market.
‘’These two elements are major concerns every investor all over the world, every partner that we have is worried about. What is your apex bank’s foreign exchange regime and how,do you deal with your
‘’They know that this subsidy constitutes a huge
amount of money and this country may not be able to survive and pay its debts. It is very clear that everybody understands this.’’
Amnesty International warns against poverty increase in Nigeria
Meanwhile, Amnesty international has said President Bola Tinubu’s decision to remove fuel subsidy had left millions of Nigerians terrified about the knock-on effects it would have on their daily lives, warning that the removal must not exacerbate poverty in Nigeria.
The acting Director of Amnesty International in Nigeria, Isa Sanusi, noted in a statement issued yesterday that many are concerned that they would be unable to meet the costs of education, food and healthcare.
According to him, the government is yet to suggest any ways to mitigate the impact of this decision for people on low incomes.
“While all countries are required to eventually remove all fossil fuel subsidies to meet their human rights obligations in the context of the climate crisis, they should not do so in a way that undermines the ability of
people on low incomes to secure their right to an adequate standard of living.
“It is therefore vital that the removal of the subsidy is accompanied by social cushioning and protection measures. Nigerians should not have to pay the price of decades of political and economic mismanagement of the
subsidy scheme. “The authorities must finally respond to long- standing demands by civil
society and parliamentarians to investigate the fuel market chain and hold accountable all those involved in smuggling, hoarding and ‘subsidy scams’ — regardless of rank or status.
“The Nigerian authorities must urgently put in place measures to protect the rights of people most affected by the removal of the fuel subsidies and prioritize addressing widespread hunger, higher unemployment and the rapidly falling standard of living,’’ the statement read.