Petrol: We are not at our full market pricing level yet – NNPC

The Nigerian National Petroleum Company Limited (NNPC Ltd) on Thursday said it is not yet in its full market pricing of petrol.

The Executive Vice President, Downstream of the NNPC Ltd, Segun Adedapo, disclosed this while speaking on the ARISE TV morning show on Thursday.

“We are not at our full market pricing of Premium Motor Spirit (PMS) yet, and that’s why the behaviour of PMS pricing in Nigeria cannot be compared to those markets where the prices are fully market-based,” he said.

In recent months, fuel scarcity hit major cities across Nigeria, with attendant effects on businesses and households. This has also prompted commercial bus drivers to increase their fares in major towns and cities, including the nation’s capital. As a result, black marketers have made brisk business selling to willing buyers at higher prices ranging from N1,000 to N1,200 and some, even higher.

On Tuesday, NNPC Ltd adjusted the pump price of petrol to N897 from N617 as motorists and commuters grumbled amid the uncertainty. Other independent stations have also adjusted their pump prices, in some instances above N900 per litre.

Speaking on Thursday, Mr Adedapo said the current increase in petrol pump price does not reflect free market conditions.

“If you look in section 205 of the Petroleum Industry Act (PIA), that’s the Act that gave birth to NNPC Limited, it tells you that petroleum prices or fuel prices were based on unrestricted free market conditions. And so, when you have a situation where fuel prices remain the same, that’s what is unusual. You won’t see that in other climes, where you have prices fixed for a long period.

“It’s actually supposed to move in consonance with changes and market conditions. During the summer months, prices are high because it’s a driving season, in the winter months, prices come down and things like that. So, that’s what the PIA provides for, prices should move with the seasons. You expect to see prices drop in those climes where petrol prices are market-based, but the opposite is our situation.

“And if you’re going to do a comparison, you want to check out the equivalent of those prices that you see in those climes and compare them to the prices here. You’ll find out that they’re still way higher than the prices we’re offering when you bring them to common currency,” he said.

He explained that the PIA provides for a free-market petrol pricing system where different players can source the product and sell at market-based prices.

“It should be a free market, unrestricted market-based conditions…what’s sustainable is the unrestricted free market pricing of PMS. That way, competition takes over, and Nigerians will get the best.

“Everyone will compete for market share, and the quality of service will improve. That feeling of entitlement by marketers or companies in the business will go away because they will compete against each other to serve consumers better,” he added.

Speaking further on what the state-owned oil company is doing to address the petrol scarcity in the country, he said the NNPC is working with all the marketers to resolve the issues.

“We are working with all of the marketers. You know we have almost a thousand stations around the country, but that’s not enough. We are working with all of the marketers, engaging with them to ensure that fuel stations open early and close late and make sure that there’s enough fuel in all of the stations.

“So, we are ensuring that deliveries are made to stations. We are doing our best to make sure that there are no diversions,” he added.

He noted that the exchange rate was impeding on the operations of the NNPC Ltd with the company experiencing challenges with foreign exchange liquidity.

“I can assure you that we have a good relationship with our suppliers, and as we speak, we don’t have a problem with the supplies coming in. Yes, we do have a challenge with payments, and that’s largely due to the fact that some FX illiquidity, it’s obvious, and that really is the challenge. As much as we are able to, we are making payments to them,” he said.

Supply

Mr Adedapo said NNPC will supply a total of 17.6 million barrels of crude oil to Dangote Refinery between September and October.

He explained that the move is part of the federal government’s push to drive local production of petroleum products.

READ ALSO: NNPC yet to lift petrol from Dangote Refinery – Official

“We have supplied about 30 million barrels of crude oil to Dangote refinery so far, and this month alone, we will be providing 6.3 million barrels of crude oil to Dangote refinery in seven cargoes and in October.

“We will be providing another 11.3 million barrels of crude oil to Dangote refinery in 13 cargoes. So we are doing everything we can to make sure this situation abates as soon as possible,” he said.