THE Nigerian National Petroleum Company Limited (NNPCL) has said that Nigerians should anticipate a potential hike in the pump price of petrol products in the coming days as the state-owned oil firm moves towards a market-reflective price.

The company’s executive vice president, downstream, Adedapo Segun, disclosed this on Thursday, September 5, on the Arise Television programme.

On Tuesday, September 3, the NNPCL adjusted its pump price of petrol to N855 and other filling stations owned by independent marketers above N900, depending on the location, which is still lower than the landing cost of about N1,200.

Despite the Petroleum Industry Act (PIA) providing a deregulated market, the NNPCL has continued to determine the supply and pricing of petroleum products.

The state-owned oil company recently revealed that it has been selling petrol at half of the landing cost and had incurred debts of $6.8 billion.

On Thursday, while responding to a question on a further hike in petrol pump price, the NNPCL vice president said, “What I can tell you simply is that the pump price today is still not market reflective. If we are, we should move towards market-reflective pump prices so the competition can kick in.

“If you look in Section 25 of the PIA that gave rise to the NNPC Limited, it tells you that petroleum prices will be based on unrestricted free market conditions.”

Segun said the situation where fuel prices remain fixed for a long period was unusual and does not happen in other climates, stressing that prices are supposed to move in consonant with changes in market conditions.

He explained that during the summer months, prices are expected to be higher because it is a driving period, and in the winter months, prices come down, maintaining that the PIA provides that prices should reflect the seasonal period.

The hike in the pump price of petrol shows that the NNPCL raised its pump price by over 50 per cent from N568 to N855, raising concerns about why it has been difficult for Nigeria to achieve some measure in pricing petrol in the country.

In responding to a question that Tanzania, one of the African countries, just adjusted its petrol price by four per cent based on the fluctuation in global oil prices, the NNPCL vice president said, “We are not at the full market pricing of PMS yet that is why PMS pricing in Nigeria cannot be compared to those markets where the prices are fully market-based.”

Segun could not state categorically what NNPCL had preferred, a free market based or one controlled by the NNPCL when asked.

He simply responded, “Well, like I said earlier, it should be free market, unrestricted market-based conditions.

“What is sustainable is unrestricted free market pricing. That is where competition comes in, and everyone competes for market shares.”

He admitted that free market pricing guarantees the quality of services and improvement in the oil sector.

Commenting on the NNPCL’s official stance, former chairman of the Major Marketers Association of Nigeria (MOMAN)Adetunji Oyebanji told the ICIR, that despite the price hike, the government is still intervening in the price of PMS.

“There’s still an intervention of about 10 per cent by the government in terms of under-recovery or if you like to call it subsidy. However, we’re closer to what it used to be in terms of market-refective pricing, but we’re not there yet,” Oyebanji said.

Scarcity to linger further, blames FX shortfall, debts to creditors

As the petrol scarcity lingers in the filling stations across the states, the NNPCL vice president could not say when the petrol scarcity is likely to abate.

He blamed the inability of the state-owned oil company to supply petrol to marketers on foreign exchange (FX) illiquidity and debts the NNPCL owes its creditors.

“When you have that situation, you have to strike a very fine balance between the size of your debts and the volume of product that you import.

“It wouldn’t make sense to import so much more and create a situation where your debts become unserviceable,” Segun said.

Segun’s responses draw the lines that the NNPCL has not been operating in line with the provisions of the PIA.

His responses also knock off the earlier claims of NNPCL having logistics challenges in supplying petrol products to marketers.

The ICIR can report that Nigerians have been facing the situation of fuel scarcity in the last two months and purchasing petrol at a pump price of close to N1,000 before the NNPCL official hiked the pump price on Tuesday.

The recent hike in pump price has changed Nigeria’s macroeconomic conditions with Nigerians bearing the brunt, a recent report by The ICIR on the immediate hike in transportation fares by more than 50 per cent has shown.

Commenting on the NNPCL vice president’s responses, managing partner, BBH Consulting, Madaki Ameh, said, “I think it is very shameful for a deputy to blame the PIA for their inability to perform.

“We have been in this country and we have witnessed its underperformance and cracked incompetent.”

He said the NNPCL has no justification to blame the PIA for the problem it has created for Nigerians.

He said every economy tries to find a way to solve a problem that is peculiar to it.

“We can’t be an oil-producing country, and we are indexing the price of our product at the pump on the international price of crude.

“As long as we keep doing that and not on the cost of production of a barrel of crude oil plus some markup for profit for the operators, then we have a problem,” Ameh added.