NNPC CEO Kyari Says Fuel Prices to Go Down After Removal of Subsidy 

The NNPC CEO also said that increased costs would lead to lower use, forecasting a 30% drop in fuel usage.

By Omotayo Olutekunbi

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Ltd (NNPC), announced in an interview with Arise TV that the price of Premium Motor Spirit (PMS), often known as petrol, will shortly be significantly reduced.

Kyari noted that eliminating gasoline subsidies would promote participation in refined product imports, resulting in a more competitive market.

The elimination of subsidies, which triggered a jump in PMS prices in Africa’s biggest economy, was originally slated to expire in February 2022 but was delayed until the first half of 2023 owing to current economic challenges.

However, Kyari maintained that the Nigerian government did not fund the subsidy but instead fell on the NNPC, which had become unsustainable.

Kyari stressed that the current pricing at NNPC stations matches market values. He emphasized that reducing the subsidies will bring new participants into the oil industry, increasing competition.

The NNPC is not permitted by law to own more than 30% of the market in the future. Oil marketers will begin to join the market as the market stabilizes, resulting in price control and probable declines.

The NNPC CEO also said that increased costs would lead to lower use, forecasting a 30% drop in gasoline usage. This fall in demand reduces the need for foreign currency, which benefits all market participants, including the NNPC.

Concerns regarding the influence of exchange rates on petrol costs were addressed by Kyari, who said President Bola Tinubu’s statement that the Federal Government would no longer subsidize PMS would result in a single exchange rate market for everyone. Once this happens, all market participants, including the NNPC, will have access to foreign currency at the same exchange rate, reducing price disputes.

Following President Tinubu’s declaration, the NNPC raised gasoline prices in Abuja and other North-Central states, including Nasarawa, Plateau, Kwara, Kogi, Benue, and Niger, from 189-194 to 537 per liter. However, with the withdrawal of subsidies and the expected market competition, Kyari’s remark raises the prospect of considerable reductions in gasoline costs in the near future.