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, said this in an interview with newsmen shortly after a private meeting with the Vice-President, Kashim Shettima, at the Presidential Villa, Abuja.
Kyari explained that the increase in the price of PMS had nothing to do with supply issues, adding that there is 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 the 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.
“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 sell it at 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’ supply in the country, that’s not a problem.
“What I know is that the market forces will regulate the market, prices will go down sometimes and sometimes it will go up but there will be stability of supply.”
He assured Nigerians that the policy was the best way for the country going forward.
“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 PMS, so many of them are online.
“Market forces have started to play, people have confidence in the market and private sector people are now importing the product.
“There is no way they can recover their cost if they cannot take market reflective cost,” Kyari said.
For his part, Alhaji Farouk Ahmed, Chief Executive Officer, Nigerian Midstream and Downstream Petroleum Regulatory Authority, said the authority does not set price of the product but it is market-determined.
“As a regulator you know I told you back in May 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, it was based on the cost of importation plus other logistics of distribution and of course the profit margin by the importer.
“This market is deregulated; it is 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 of them have indicated to supply within the third quarter which is July, August and September and out of those already we received some cargoes 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 interfere in the price because it was not part of those importing the product.
“But the pricing, as a regulator, we are not going to put the 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 the crude oil going up, a couple of weeks ago 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 because the importers are importing; they are basing it on the cost of importation plus other cost elements in terms of local distribution,” Ahmed said.