The development follows the commencement of petrol refining by the Dangote Refinery earlier in the week.
The Nigerian National Petroleum Company Limited (NNPCL) has said Premium Motor Spirit or petrol from the Dangote Refinery will begin to flood the market from September 15, 2024.
The company who revealed this in a statement signed by its Chief Corporate Communications Officer, Olufemi Soneye on Thursday in Abuja, said prices of products would be determined by market forces.
The development follows the commencement of petrol refining by the Dangote Refinery earlier in the week.
Quoting NNPCL’s Executive Vice President of Downstream, NNPC Ltd, Adedapo Segun, Soneye said the downstream sector had been fully deregulated, and the company would no longer fix prices.
His argument puts to rest speculations that NNPCL would continue to fix prices despite announcement that the downstream sector had been deregulated.
The speculation was also fueled by reports that NNPCL would be the sole lifter of petrol from the Dangote refinery.
“The Nigerian National Petroleum Company Limited (NNPC Ltd) has stated that foreign exchange (forex) illiquidity has been a significant factor influencing the fluctuation in prices of Premium Motor Spirit (PMS), which are governed by unrestricted free market forces, as provided for in the Petroleum Industry Act (PIA),” the statement said in part.
While quoting Segun, NNPCL explained that the current fuel scarcity was expected to “subside in a few days as more stations recalibrate and begin selling PMS.”
He said Section 205 of the PIA, which established NNPC Ltd, stipulated that petroleum prices were determined by unrestricted free market forces.
According to him, “The market has been deregulated, meaning that petrol prices are now determined by market forces rather than by the government or NNPC Ltd. Additionally, the exchange rate plays a significant role in influencing these prices.”
On the commencement of lifting PMS from the Dangote Refinery, Segun said that NNPC Ltd was awaiting the September 15th timeline provided by the refinery.
Segun, who said no right-thinking individual would be comfortable with the current fuel scarcity, added that the NNPC Ltd had nearly a thousand filling stations nationwide and was collaborating with marketers to “ensure that stations open early, close late, to maintain adequate fuel supply to meet the needs of Nigerians.”
He assured Nigerians: “We are also engaging relevant authorities to ensure product diversions are prevented and timely deliveries to all stations are ensured. The scarcity should ease in the next few days as more stations recalibrate and begin operations.”
Segun’s clarification comes after the Federal Government declared that there was going to be a massive supply of petrol at the weekend as vessels had started offloading, but ruled out PMS price fixing.
NNPCL also said it had supplied 30 million barrels of crude oil to the Dangote refinery so far, planning an additional 17 million barrels soon.
The company said it will supply 6.3 million barrels in September and 11.3 million barrels in October.
“We have supplied about 30 million barrels to Dangote so far, 6.3 million this month, and we will supply 11.3 million in October,” he stated.
It noted that the 6.3 million barrels would be delivered in seven cargoes but expressed concern that the current pump price of petrol did not reflect market realities.
“The pump price today is not market reflective. NNPCL is the sole importer of PMS in the country, which is abnormal. We should be coming to a situation where the free market determines prices,” he said, stressing that market forces should drive fuel prices, rather than any single entity.
On NNPCL’s role as the sole importer of petrol, Segun said it was not a deliberate decision by the company but a response to market conditions.
“Let me put it in proper perspective, NNPC is not a regulator. We didn’t put ourselves in the position of sole importer. We don’t determine who plays in the market. We decided to come in when others reduced their participation. It is not about us wanting to be monopolists,” Segun stated.
He explained that achieving a stable fuel supply and price would require perfect market conditions, including a more liquid foreign exchange market.
“Market conditions need to be perfect, and there needs to be FX liquidity,” he added, hinting that broader economic reforms might be needed to resolve the fuel pricing dilemma.
“Once Dangote refinery begins the rollout of PMS and we at NNPC commence lifting, we will communicate the details,” Segun added.
