The NNPCL cites the following as the primary causes for the increase in fuel prices: “You buy the item when you go to the market, and you sell it there at the current market price.
On Tuesday, the Nigerian National Petroleum Company Limited (NNPCL) cited “market forces” as the cause of the country’s rising gas prices.
In a private meeting with Vice President Kashim Shettima at the Abuja State House, NNPCL Group CEO Mele Kyari disclosed this information to the media.
According to Mr. Kyari, market forces will occasionally raise and occasionally lower gasoline prices as a result of the deregulation of the oil business.
We have a marketing division in our company. In response to market conditions, they adjust prices.This is what’s happening in reality, and it’s important to make sure the market regulates itself so that prices grow and occasionally fall as well. He said, “This is what we’ve seen, and this is actually how the market works.”
He made it clear that there is no shortage of petroleum products because there is enough of them to continue distribution across the country.
“You purchase the item when you visit the market, and you then sell it there for the going rate. not at anyway related to supply. The supply is adequate where I am. There is a lot of supply.
He asserts that there are sufficient supplies in the nation to survive for more than 32 days.”Yes, I am aware that market forces will control how the market is run.
On occasion, prices will change, going up and down. Nevertheless, I can promise Nigerians that the supply won’t change and that, going forward, this is the right course of action so that we may change the price when market forces are at play.
Although I was unaware of the specifics at the time, I was aware that our marketing department operated exactly like any other company in our industry.
I am aware that many businesses now import goods with a petroleum base. since a large number of them are online.”I’m certain that my colleague would attest to this. People have begun to have faith in market forces as they have begun to operate.
If private sector importers don’t use pricing that reflects the market, they will never be able to recoup their expenditures.
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The effects of crude oil
When speaking at the same time, Farouk Ahmed, the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), linked the price hike to the rise in crude oil prices globally.
I informed you in my capacity as a regulator back in May that we would not be establishing prices.
You saw when the rates were released in early June that they were based on the cost of importation, additional distribution logistics, and, of course, the importer’s profit margin. The market will make its own conclusions.
This market is open to all participants and is unregulated. I mentioned yesterday that 56 advertising companies had applied and received import approvals while I was in Lagos.
Ten of them, or the third quarter, which is July, August, and September, have indicated their availability to provide. Prudent Energy, AYM Shafa, and Emadeb are a few of the marks from which we have previously received freight.
On Wednesday, Emadeb Cargo is anticipated.He highlighted that the change ensured that the market was open and that anyone may import as long as they followed the rules, especially those pertaining to product quality.
However, since we are a regulator and do not import goods, we will not impose a price cap. We are merely a regulator; we are not a marketing firm.
As a result, if you assert that market forces are in play, you essentially take the rising cost of fuel into account when making decisions. The cost of crude was about $70 per barrel a few weeks ago. At the moment, a barrel costs about $80.”As a result, goods prices are impacted by the price of oil. Due to the nature of their business, he claimed that importers base their prices on the cost of importing the goods plus freight and other costs associated with local distribution.
Background
Early on Tuesday, several NNPCL stations in Abuja and other regions of the nation increased the cost of gasoline to N617 per liter.
A price rise for gasoline at the national pump was approved by the oil industry months prior to the adjustment.
President Bola Tinubu announced the end of gasoline subsidies in his inaugural speech on May 29.
The Nigerian National Petroleum Company Limited (NNPCL), in response to the news, gave its retailers permission to increase the cost of gasoline from its initial price of under N200 to between N480 and N570 per liter.
The cost of transportation as well as the prices of products and services increased right away as a result of the increase.
