The Nigerian National Petroleum Company Limited (NNPCL) has increased the pump price of Premium Motor Spirit (PMS) also known as petrol to N617 per litre in a move the Nigeria Labour Congress (NLC) said is unacceptable to Nigerians.
Malam Mele Kyari, NNPCL’s Group Chief Executive Officer, who confirmed this on Tuesday in an interview with newsmen shortly after a private meeting with the Vice President, Kashim Shettima, at the Presidential Villa, in Abuja, said this was dictated by the market realities.
This was as the market regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said the authority doesn’t set the price of the product but it was market determined and the Independent Petroleum Marketers Association of Nigeria (IPMAN) explained that the price hike was due to the high foreign exchange rates.
Kyari, who denied that the new increase in the pump price of the product was a result of short product supply, said it is a reflection of the present market situation.
”There are robust supplies, 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 sometime it will go up but there will be stability of supply,” Kyari said.
Kyari explained that the new pricing policy was the best option for the country.
“And 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 products.
”And there is no way they can recover their cost if they cannot take market reflective cost,” Kyari said.
But Benson Upah, Head of Information and Public Affairs of the NLC, in a media interview, described the new price increase as a significant threat to the socio-economic well-being of Nigerians, their businesses, incomes and livelihood as he blamed the government for leaving the Naira to the vagaries of the market.
“This increment is unacceptable to us at the Congress because it poses a significant threat to the socio-economic well-being of the citizenry, their businesses, incomes, livelihood, everything!
“We had said earlier that no reasonable government acting reasonably, leaves its national currency entirely to the storms of the Market as this could lead to unintended consequences,” Upah said.
He said it was part of a ploy by the Federal Government to fix the pump price of petrol at N1,000 per litre.
“The new pump price is suggestive of the fact that the pump price could rise to N1000 or more per litre any time soon. It makes planning difficult and life uncertain.
“We advise the government to retrace its steps from this journey. The people are not happy. Their calmness should not be taken for granted,” he said.
However, Alhaji, Farouk Ahmed, Chief Executive Officer of MDPRA, said the authority doesn’t set the price of the product but the market determines its=. He explained that the market is now deregulated and open to all participants. He insisted that the authority will only regulate and not cap 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 is around 80 dollars per barrel
“So of course the crude price also drives the product price you know because the importers are importing and based it on the cost of importation plus other cost elements in terms of local distribution,” Ahmed said.
Also, Chinedu Okoronkwo, the National President of the IPMAN, said the high exchange rate of the Naira was responsible for this new product increase as he pointed out that the products are still imported to Nigeria.
Okoronkwo, speaking on Arise Television on Tuesday, called for the use of Compressed Natural Gas (CNG) as an alternative to petrol.
“Today the dollar is around N800 and in a deregulated regime, what determines the price of anything is the cost. Ts on Arise Television on Tuesday, the product is not refined here, everything is imported.
“If we want to achieve something, there are other alternatives we have proffered. The CNG is something this nation needs to seriously look into; so it would be a matter of choice if you want to use gas or petrol.
“The price has really gone up because of the fundamentals in the market which has to do with the dollars,” Okoronkwo said.
The pump price of petrol was increased to over N500 per litre following the removal of the fuel subsidy in May.