By Baron Ike
Gradually, the federal government is about to succumb to pressure to utter the existing pump price of the petroleum products, with the Nigerian National Petroleum Corporation (NNPC) providing justification for its recent adjustment of petrol pump price at its retail outlets.
The NNPC retail outlets that were selling fuel at between N138 to N143 last week adjusted their pumps to N145n per litre.
With the adjustment, the federal government has cleared the coast for major marketers and other dealers in petroleum products who recently complained about paucity of foreign exchange to sustain import of the products to push for another price variation upwards.
The NNPC has however denied meeting with President Muhammadu Buhari to lobby for his approval of an increase in petrol pump prices.
But industry watchers are confident that most petroleum marketers will not agree to sell their products at the price the government is sells to the public when they are dependent on the government most of the time to source for Forex except there is a deal between the duo.
The implication, some of them argued, is that the major marketers may unilaterally hike the cost of their products to between N148 or N150 or take steps to persuade the federal government to agree to the price differential.
A statement from the corporation’s Group General Manager Public Affairs, Garuba Deen Muhammad, on Monday, November 7 in Abuja, said the NNPC management never met with Buhari to push for a hike in the pump price of petrol from its current N145 to N150 per litre.
It also reiterated what the minister of states (Petroleum) Ibe Kachikwu said that it was not statutorily empowered to make any adjustments in the pricing template of petroleum products approved by the Petroleum Products Pricing Regulatory Agency (PPPRA), blaming the media for false report.
However, the NNPC insisted like Kachikwu that the price adjustment in its downstream facilities from N141 to N145 per litre was still within the price band of N135 and N145 per litre approved on May 11, 2016 by the PPPRA which is the statutory body in charge of petroleum products pricing in Nigeria.
On Saturday, November 4, Kachikwu said the federal government was not about to increase the price of petrol in the country, at least not in the near future.
But he made mention the government reviewing some of the elements in the pricing template of the Petroleum Products Pricing Regulatory Agency (PPPRA), which are still within its control with operators in the downstream sector to ensure that the price remains in line with market fundamentals.
Kachikwu said: “First, I am not aware that the NNPC has increased its price. I need to look into that, it’s a bit of surprise for me, because there are processes in doing this.
“If they have done that, it means they are doing it wrongly. Let me find out what the facts are. Having said that, the reality is that what we did at the point where we did some liberalisation was to enable the market float the price.
“Obviously, as you look at foreign exchange differentiations and all that, it would impact the landing cost of petrol.”
“The worst thing you could do is to go back to the era where we basically were fixing prices. What we ought to be doing is watching prices, making sure that they are not taking advantage of the common man; making sure that the template is respected.
“One of the things I think we had hoped to do, which we should still do before we embark on any price increase is to work on those templates. There are still areas that are within government control.
“These are payments to the Ministry of Transport and the rest, payments to the Nigerian Ports Authority (NPA) that are foreign-currency denominated.
“We are working on the possibility of being able to shift that out so that you still can modulate the prices within where it is right now. But I would hold a conversation with the industry and see how it is going.”
The minister further said what was key was to ensure that fuel queues do not resurface and those that are investing in petroleum products marketing must be able to predict the “pricing methodologies, the pricing consequences and the actions to be able to justify their investments.”
“At the end of the day, I think PPPRA is the agency that has the authority to say it is time the templates does justify some level of movement, otherwise you have a crisis of individual decisions on pricing.”