The group chief executive officer of Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, yesterday continued his defence of the withdrawal of the litigious petrol subsidy saying the prevailing high cost of the product would tumble as new players come into the system.
Recall that President Bola Tinubu announced the end of petrol subsidy in his inaugural speech on Monday, May 29.
The announcement triggered a return of queues at petrol stations nationwide.
Later, the NNPC Ltd which is the sole importer of fuel, released a price template for which the product would be sold.
The prices which have already been implemented by petrol stations showed the product selling between N448 and N557 per litre in some states of the country.
Speaking in an interview on Arise Television programme yesterday, Kyari assured that competition among major players in the oil sector will crash the price of petrol.
He contended that the subsidy removal would ensure a healthy competition which would ultimately drive down the per litre cost of the product.
“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 does not 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.
“Therefore, you will see competition, even with NNPC. Competition will definitely come in and the market will regulate the prices itself.
This is just an instantaneous price and within a week or two, you will continue to see different prices because of different approaches from major players, companies have different approaches to it and competition will guide that.
“Ultimately, you’d see changes downwards and it is very likely because efficiency will come in.
“As soon as competition comes in, people will become more efficient in their depots, in managing their trucks and in managing their fuel stations so that people can come to their stations.
“It is showing already. Right now, you will see motorists going to stations where they can have price differences; so this will regulate the market and on its own, the price will come down naturally anyone I don’t see any doubt about this,” he said.
On why fuel stations hiked the pump price when they still had the subsidised old stock of petrol, Kyari said the ealers would have adjusted downward if there was any price reduction.
“It could have been the other way round; prices could have collapsed downwards and those holding the old stock will have to sell at lower prices to arrive at market condition.
“The prices we are seeing today at our stations are the current price of the commodity. This means that prices in the market can go down at any time and of course, the market will adjust itself,” he added.
At a meeting with the national working committee members of the All Progressives Congress (APC) in Abuja later on that day, Kyari debunked the provision for petroleum subsidy in the 2023 budget prepared by the previous administration of President Muhammadu Buhari.
“There was a subsidy in 2022 but in 2023, not a single naira was provided for the purpose of financing the subsidy.
“And ultimately while we held back our fiscal obligations, we still have a net balance of over N2.8 trillion that the federation should have given back to the NNPC.
“For any company, when you have negative N2.8 trillion, there is no company in the whole of Africa that will lend to you, you cannot have receivables.
“The provision of subsidy is there, but absolutely there is no funding for it,” Kyari said.
He stated that should the subsidy regime continue, NNPCL would run into default and which would in turn affect the country.