The need to enable oil marketers who have already placed orders for imported petrol to have confidence in the system was what informed the latest price review, industry operators have stated.
There was general apprehension among stakeholders that as at Monday this week, despite the fact that the price was at over N500 per litre there was still a subsidy of over N100. There was need to cancel that in other to cultivate the confidence of marketers whose products are on the way to Nigeria. The action was also to assure the marketers that they would not sell their product below the expected market price when they arrive in the country.
According to industry operators, if a cost-reflective price is not in operation, marketers that have heeded the call of the Federal Government to import the product in order to reduce the dominance of the Nigerian National Petroleum Company Limited may abandon the scheme.
According to Tunji Oyebanji, the managing director of 11plc, he said, that he agreed that an upward review of the price of petrol at the filling stations by NNPC was done to allay the fears of marketers.
“Yes, this should allay the fears of marketers and encourage them to import, as long as the government does not reserve themselves.”
On the general reaction of the people, he said: “This is not unexpected as platts has gone up and Naira has depreciated. Just look at the Diesel price. The alternative is to go back to the subsidy.”
Nigerians should not be surprised that the price of petrol has been reviewed upwards as this has been made clear ever since the removal of multiple exchange rates and subsidy took place. Fundamentally, the law of demand and supply should be the name of the game, an operator told Business Standards.
Some operators however blamed the Nigerian National Petroleum Company Limited for not educating Nigerians that the price of a litre of petrol will not be stagnant, as it will be fluctuating up and down depending on the prices of crude oil and exchange rate dynamics. They stated that by educating Nigerians on the issue they would not be surprised if the price of the product goes up or come down when the need arises in the future.
They believe that if that has been the situation the current hues and cries would not be as loud as it is now.
The price of fuel was updated nationwide at stations operated by state-owned NNPC on Tuesday following a meeting that was held with oil marketers in the previous day (Monday) by the Nigeria Midstream and Downstream Regulatory Authority (NMDRA).
That saw a rise from N557 naira per liter to N617 naira, or just over $0.78.
Three among the 10 oil marketers that indicated that they are able to import Premium Motor Spirit (PMS) in the third quarter of this year, which is July, August and September have started bringing in the product to the country.
A total of 56 companies applied to get license to import Premium Motor Spirit or Petrol.
The Nigeria Midstream and Downstream Regulatory Authority (NMDRA) has enjoined others to double their efforts at bringing in more petrol so as to make the Nigerian National Petroleum Company Limited (NNPCL) less dominant in the supply of product to the country
The Authority Chief Executive Officer, Farouk Ahmed, stated that the meeting held on Monday was call to encourage marketers to bring in more PMS or petrol and to know if there is anywhere the Authority or government can intervene or assist them.
“If you recall, you will remember that Mr. President at his inauguration speech, said subsidy is gone, and we encouraged all the marketing companies who are interested to come forward for license to import. So this meeting I call to thank some of them that actually took that offer”
“The three companies that have landed cargoes already are Prudent Energy, AYM Shafa and Emadeb, while others have indicated interest to import in August and September, so the meeting was just to encourage them to import so that can displace NNPC dominance in the market.”
“Because the market is open for us to compete and we want to encourage all the marketing companies to come and conduct their normal business in this arena.”
He said that the marketers have choices of where they go to import the product, but if the NNPC alone goes to import it means it has an advantage over them and the Authority does not want any dominant player in the market.
“But it would be nice to give them words of encouragement, ask them if there is any area they need support from the regulator or the government so that they can encourage them to participate. Withdraw from
