Nigeria may see further increases in petrol prices as Adedapo Segun, Executive Vice President (EVP) Downstream of the Nigerian National Petroleum Company Limited (NNPC), advocates for transitioning to a market-based pricing system.
Segun’s comments come amidst recent price hikes, with the NNPC adjusting petrol prices from between N568-N617 per litre to between N855-N897 per litre.
In an interview with ARISE NEWS on Thursday, Segun emphasized the need for Nigeria to adopt unrestricted free market conditions to permanently eliminate fuel queues. “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,” Segun explained. He noted that in other regions, fuel prices fluctuate with market conditions and seasonal changes, a practice that the Petroleum Industry Act (PIA) envisions for Nigeria.
Segun acknowledged that while petrol prices are rising in Nigeria, other countries with market-based systems are experiencing price reductions. “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 behavior of PMS pricing in Nigeria cannot be compared to those markets where the prices are fully market-based,” he said.
Segun suggested that a fully market-based system would foster competition, improve service quality, and lead to more efficient pricing. “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,” he added.
Addressing concerns about rising petrol prices and government subsidies, Segun stated, “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.”
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Regarding fuel scarcity, Segun assured that the NNPC is actively working to resolve 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 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. We are ensuring that deliveries are made to stations. We are doing our best to make sure that there are no diversions,” he said.
Segun also addressed the recent admission by NNPC about facing financial constraints affecting fuel supply. He assured Nigerians that despite some challenges with payments, “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.”
On the topic of debt, Segun commented, “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.”
He also highlighted the anticipated positive impact of the Dangote Refinery, stating, “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.”
