In an effort to allay Nigerians’ concerns, Group Chief Executive Officer of Nigerian National Petroleum Company Limited, NNPCL, Mele Kyari, stated yesterday that the current high price of petrol will crash in a very short period of time.
Recall that the business developed a new template that set the product’s price at between N488 and N557 per litre nationwide.
He provided the reassurance in an interview for the Lagos-accessible Morning Show programme on Arise TV.
On the day Kyari gave his speech, Amnesty International warned against the country’s increased poverty as a result of the removal of the fuel subsidy and urged the Federal Government to swiftly devise mitigation strategies.
In contrast to the upward trends that had sparked panic in the nation, the NNPC boss claimed that competition among the major players in the oil sector will drive down the price of the good. He claimed that eliminating the subsidy will make way for new This, he claimed, would guarantee healthy competition, which would ultimately result in a review of the price of petrol at the pump across the nation that was lower. In the words of Kyari, “The beauty of this (subsidy removal) is that there will be new entrants (into the market), because oil marketing companies’ reluctance to come into the market all along is the very fact of the subsidy regime that is in place.
“That subsidy regime doesn’t have a guarantee of repayment back to those who provide the product at a subsidised price, and now that the market is being deregulated, oil marketing companies can actually import product or even if it is produced locally, they can buy and take it into the market and sell at its retail price,” the author writes.
Therefore, even with NNPC, there will be competition. Furthermore, NNPC is prohibited from controlling more than 30% of the market going forward by law. Oil marketing companies can enter the market as soon as it stabilises.
“There will undoubtedly be competition, and the market will control prices on its own. As a result, this is just an instantaneous price, and within a week or two, you will continue to see different prices due to varied strategies employed by major players, companies, and the competitive environment.
“In the end, there would be downward changes, and it is very likely because efficiency will increase.
As soon as there is competition, people will become more effective in managing their depots, trucks and petrol stations so that customers can visit their stations.
“It is already showing.” As a result of this market regulation, which will take place right away—and there is no reason to doubt this—you will see drivers heading to petrol stations where prices can vary.
The NNPL boss responded, “This is the reality of the market,” when asked why petrol stations increased their pump price while they still had in stock products that had already been given subsidies. It is applicable to all goods, not just petroleum.
“It could have gone either way; prices could have plummeted, forcing owners of old stock to sell at lower prices in order to reach market conditions.
“This is a stock management issue, which is very common, and there is nothing unusual or serious about it; nobody can change it.
“The prices we are seeing at our stations right now reflect the commodity’s current price. This implies that market prices may decrease at any time, and the market will naturally correct itself.
Soon, the NNPC GMD assures Nigerians, will come palliatives.
In the meantime, after a meeting with Senator Abdullahi Adamu, the national chairman of the All Progressives Congress (APC), yesterday at the party headquarters in Abuja, Kyari revealed plans by President Bola Tinubu to distribute palliatives to Nigerians to lessen the impact of the sudden removal of fuel subsidies.
He claims that one of the nation’s four idle refineries will be restarted this year, and another will be revived the following year, until they are all in working order.
He stated: “A flexible and unified foreign exchange regime is currently being created gradually. Foreign exchange will be available to everyone, and since a transition is currently taking place, NNPC cannot continue to be the only importer. We are aware that this will disappear and the market will stabilise it.
“Rehabilitation work is still ongoing, but one of the refineries will start operating this year. The second will start streaming in a year, and the third in 2025.
Of course, it is crystal clear that we cannot afford it anymore. Bills for subsidies are mounting. The amount we are spending on subsidies is more than the nation can pay to the NNPC.
It is therefore appropriate at this time to set the price of petroleum products according to the market. Long-term, we think this will be advantageous for the nation.
I’m aware that the President has ordered some engagement and that some palliatives will be implemented. And I have no doubt that this will take place. While there was a subsidy in 2022, according to Kyari, there was not a single naira set aside to pay for the subsidy in 2023.
We ultimately have a net balance of more than N2.8 trillion that the federation should have returned to the NNPC, even though we delayed our fiscal obligations. In the entire continent of Africa, no company will lend to any company with a negative of N2.8 trillion. Receivables are not permissible.
“Subsidy is available, but there is unquestionably no funding for it. It indicates that it is only on paper. Therefore, it is not real. The topic of discussion today is not really when you will stop receiving subsidies.
“We can no longer take it; if we do, NNPC will default, and Nigeria will default if NNPC defaults,” the statement reads. When NNPC experiences defaults and illiquidity, it affects every country-wide borrowing decision, including those made by subnationals. Your creditors will inform you that your nation is no longer able to make payments.
“Stop talking about subsidies if you want to stop this,’ I said. The bond market increased within 24 hours of Mr. President’s announcement that the subsidy was ending. There is nothing else to it besides the assertion regarding subsidy and apex market balancing.
‘’Every investor and partner we have is concerned about these two factors, which are of utmost importance. What is the foreign exchange policy of your central bank and how do you handle subsidies?
They are aware of the enormous amount that this subsidy
a certain amount of money, this nation might not be able to survive and service its debts. Everyone has a very clear understanding of this.
Amnesty International issues a warning about the rise in poverty in Nigeria
Amnesty International has warned that President Bola Tinubu’s decision to end fuel subsidies has caused millions of Nigerians to fear what consequences it will have on their day-to-day lives and that the removal must not make the country’s poverty worse.
In a statement released yesterday, Isa Sanusi, the acting director of Amnesty International in Nigeria, noted that many people are worried they won’t be able to afford the costs of education, food, and healthcare.
He claims that the government has yet to make any recommendations regarding how to lessen the effects of this decision for those with low incomes.
“Although all nations must eventually end all subsidies for fossil fuels in order to uphold their human rights obligations in the face of the climate crisis, they shouldn’t do so in a way that makes it harder for those with low incomes to secure their legal entitlement to a living wage.
Therefore, it is essential that social protection and cushioning measures be implemented along with the removal of the subsidy. The cost of decades of political and economic mismanagement of the subsidy scheme shouldn’t be borne by Nigerians.The government must finally comply with persistent requests from civil
Everyone involved in smuggling, hoarding, and “subsidy scams” should be held accountable by society and lawmakers, regardless of position or status.
The statement stated that “the Nigerian authorities must immediately implement measures to protect the rights of people most affected by the removal of the fuel subsidies and prioritise addressing widespread hunger, increased unemployment, and the rapidly declining standard of living.”
