The era of subsidy on petrol is gone forever, the Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, said on Monday.
Kyari, who spoke during a live programme on African Independent Television, stated that with the current fluctuations in global crude oil prices, the cost of refined products would be determined by market forces going forward.
He explained that although the NNPC was not responsible for petroleum products pricing, the country was currently transiting into a market situation where the forces of demand and supply would determine the cost of Premium Motor Spirit.
Asked whether there was still petrol subsidy or under-recovery on PMS by the NNPC, Kyari said, “Subsidy and under-recovery are zero today. And it is zero forever.” In March, the Federal Government reduced the pump price of petrol from N145/litre to N125/litre.
On April 1, the price was further reduced to N123.50/litre, although many Nigerians expected a much lower cost. The Petroleum Products Pricing Regulatory Agency explained that the reduction was due to the sharp fall in the price of crude oil in the international market following the outbreak of coronavirus.
When told that Nigerians expected a further reduction in petrol price as a result of the plunge in crude oil prices, Kyari explained that several factors determined price crash. He said, “I know that we are transiting into a market situation where the forces of demand and supply will regulate the pricing while avoiding the possibility of abuses that can actually come in.
“So I know that ultimately the market forces will take its shape in a way that everybody will know the various requirements.” He noted that the decline in crude oil price would often reflect on the cost of refined products in three to four-week time and not immediately.
Kyari said, “I don’t see oil price going below the $20 per barrel price that we saw last week. I’m certain, all things being equal, oil price will bounce back.”
He said the aspiration of the NNPC was to grow Nigeria’s crude oil production to three million barrels per day. “As of yesterday, our production has, for the first time in many months and years, risen to 2.3mbpd.” He expressed optimism that the trend would continue.