Executive Vice President (EVP) Downstream of the Nigerian National Petroleum Company Limited, Adedapo Segun, has said that Nigeria should move toward market-based petrol pricing to permanently eliminate fuel queues, even as he acknowledged that NNPC’s current price of N897 per litre is still being subsidised by government.
Segun said this in an interview with ARISE NEWS on Thursday, explaining that the most sustainable option for Nigeria is the unrestricted free market pricing of PMS.
On Tuesday, the NNPC raised the price of PMS from its former prices of between N568-N617 per litre to between N855- N897 per litre.
Addressing the hike, the EVP said, “If you look in section 205 of the 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.”
Segun then acknowledged that while Nigeria was seeing petrol pump price hikes, other countries were getting reductions. However, he said, “You expect to see prices drop in those climes where petrol prices are market based, but the opposite is our situation, we’re not at our full market pricing of 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. 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 then said, “It should be 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.”
Segun then explained the reason for the continuous increase in petrol pump price even though information had shown that the government has accumulated about N7 trillion in debt from shortfall payments in order to subsidise petrol as he said, “It’s a zero-sum game. If the government is paying for it and the prices go up, it means the government is paying less for it. So, it’s simply a zero sum game, there is no duplication.”
The Downstream EVP then addressed the problem of scarcity in the country, saying that the NNPC is working twenty-four-seven to solve the issue.
“We’re working with all of the marketers. You know we have almost a thousand stations around the country, but that’s not enough. We’re 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 said.
He then addressed the recent admission by the NNPC that it was facing financial constraints which had affected supply of petroleum into the country. However, he assured Nigerians saying, “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.
“And talking about the debt, I wouldn’t want to go into that issue, but yes, there is a debt. There may have been a denial on the exact amount that was posted in the media, it wasn’t a correct amount, so maybe that was a denial. But yes, there is a debt, it’s not news to everyone, but we are doing all we can to make sure that we retain the confidence of our suppliers, and I can assure you that our suppliers have confidence in our ability to pay.
“NNPC has never defaulted in making its payments, and that’s why our suppliers continue to back us up. The good thing also is that we have Dangote Refinery coming up in production as has been announced, and that would also provide a source of supply into the country.”
Ozioma Samuel-Ugwuezi
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