We Haven't Reached Full Market Price for Petrol Yet — NNPC

Petrol Prices Still Below Market Level - NNPC

“If you look in section 205 of the Petroleum Industry Act (PIA), that's the Act that gave birth to NNPC...”

NNPC Ltd says petrol pricing not yet fully market-based, cites PIA. Fuel scarcity hits Nigeria's cities, sparking fare hikes and black market sales. NNPC collaborates with marketers to tackle scarcity.

 

NNPC Ltd revealed on Thursday that it has not yet reached full market pricing for petrol.

Segun Adedapo, Executive Vice President, Downstream of NNPC Ltd, made this disclosure during an appearance on ARISE TV's morning show.

“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.

Nigeria's major cities have been plagued by fuel scarcity, causing disruptions to businesses and households. Commercial bus drivers have capitalized on the shortage, hiking fares in cities nationwide, including the capital. Black marketers have also exploited the situation, selling fuel at inflated prices of N1,000 to N1,200, or even higher, to desperate buyers.

NNPC Ltd raised the petrol pump price to N897 per litre on Tuesday, up from N617, sparking complaints from motorists and commuters. Independent stations followed suit, with some hiking their prices above N900 per litre.

“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.

According to him, the Petroleum Industry Act (PIA) allows for a deregulated petrol pricing system, enabling various players to procure and sell petrol at prices determined by market forces.

“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.

He added that the Nigeria National Petroleum Company Ltd (NNPCL)  is collaborating with all marketers to tackle the petrol scarcity challenge and restore normal supply.

“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 pointed out that the exchange rate is hindering NNPC Ltd's operations, as the company struggles with foreign exchange liquidity challenges.

“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.

The NNPC Ltd's operations are being hindered by the exchange rate, which has led to foreign exchange liquidity challenges.

“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.