The Nigerian National Petroleum Company Ltd or NNPCL has announced that the recent increase in fuel prices will lead to more competition in the fuel market.
Mele Kyari, the Group CEO of NNPCL, explained that many oil marketing companies were hesitant to enter the Nigerian market due to the subsidy regime.
However, now that prices will reflect market realities, more companies will be willing to import and sell fuel in Nigeria.
He said, "The beauty is that there will be new entrants into the market. Now that the market regulates itself, oil marketing companies can import or produce fuel and sell it at market prices."
Kyari also mentioned that NNPCL, by law, cannot control more than 30% of the market going forward.
He emphasised that once the market stabilises, oil marketing companies can enter the market, which will lead to self-regulation and reduced inefficiencies.
Explaining the reason for the price adjustment, Kyari mentioned that although the budget allowed for subsidies until the end of June, there was no available financing.
He said, "You can make a provision in the budget, but you must finance it, and that financing part is absent."
Kyari clarified that the current prices reflect the market price of fuel and can fluctuate based on market conditions. He also highlighted that the removal of fuel subsidies and price adjustments will improve the credibility of industry data and reduce fuel smuggling to neighbouring countries.
He stated, "Now that the status quo has changed, it will no longer be products smuggled to other countries but an expansion of fuel trade."