Nigerian fuel prices hiked to N617 a litre oil company blames market forces for rise as inflation skyrockets for the sixth month in a row according to latest data
The Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, has told journalists that market forces should be blamed for the recent hike in fuel prices.
He disclosed this Tuesday, following a closed door meeting with Vice President Kashim Shettima at the State House, Abuja.
Kyari said, “They are just prices depending on the market realities. This is the meaning of making sure that the market regulates itself. Prices will go up and sometimes they will come down also.”
A customer checks out at the cash register in a mall in Abuja, Nigeria, September 15, 2022. REUTERS/Afolabi Sotunde/File Photo
However, he debunked notions that the price increase is due to a shortfall in petrol supply.
“No, there is no supply issue. It is not a supply issue.“When you go to the market, you buy the product, you come to the market and sell it at its prevailing market price. It has nothing to do with supply. We don’t have supply issues.“We have a robust supply. We’ve had over 32 days of supply in the country. That’s not a problem,” he explained.
Several NNPCL-operated stations increased the petrol pump price from N537/litre to N617/litre in Abuja with independent marketers following suit.
His counterpart at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) Farouk Ahmed said the recent hike in global fuel prices was the market force.
Ahmed said, “Basically, what we’re seeing is the effect of market forces. You can see that crude oil prices have been on the rise. Just a week ago, crude oil prices hovered around $70 per barrel, but now it’s surpassed $80 per barrel. So naturally, these prices also influence the cost of the product.”
Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Abuja-Suleja, Mohammed Shuaibu said the hike was due to the NNPCL being the sole importer of the precious commodity.
“This is because NNPCL is still the major importer of petrol into Nigeria currently, though other marketers are gradually importing the commodity. The price this (Tuesday) morning at some NNPCL stations is N617/litre,” he affirmed.
Inflation rose for the sixth month in a row in June, to 22.79% year-on-year from 22.41% in May, putting pressure on the Central Bank of Nigeria (CBN) to tighten policy further when it meets to set interest rates next week.
Data from Nigeria’s National Bureau of Statistics (NBS) showed food inflation was a key driver of the increase in the headline rate.
Food inflation accounts for the bulk of Nigeria’s inflation basket and rose to 25.25% in June from 24.82% in May.
Inflation has been in double-digits in Africa’s biggest economy since 2016, eroding savings and incomes.
President Bola Tinubu embarking on the boldest reform in decades and gambling on reviving a sluggish economy announced the discontinuance of subsidy on petrol and loosing the restriction on foreign currency trading.
The removal of the fuel subsidy led to a jump in the price of the commodity from N198/litre to over N500/litre on May 30, 2023 and the Naira exchanging for N820 to a dollar as of Tuesday.
Analysts had warned that a weaker Naira and the fuel subsidy removal were likely to push inflation higher in the short term.
Akowe with reports from Abuja