The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, has defended the company’s current monopoly in fuel import, arguing that oil marketers withdrew from fuel importation due to price volatility.
Addressing the Senate Committee on Finance on Wednesday at the National Assembly complex, Kyari said oil marketers could not cope with price oscillation in the downstream sector and consequently took the option to refrain from importation.
Petroleum marketers under the aegis of the Independent Petroleum Marketers Association of Nigeria, the private depot owners, otherwise called the Depot and Petroleum Marketers Association of Nigeria, and the Major Marketers Association of Nigeria, have reportedly boycotted fuel importation due to exchange rate volatility.
The GCEO, NNPCL however dismissed the concern as he assured the lawmakers that nothing was amiss in the downstream sector despite his corporation’s monopoly in fuel importation.
He said, “The oil companies withdrew because they can’t manage the oscillation and responsibility that the Petroleum Industry Act imposed on us. We have the market and I can assure you that we are managing this.
“Some marketers buy from us and sell. But there is an element that we can’t control. For instance, truck owners can adjust their prices, we have no control over that.”
Kyari further claimed that the distortion in the foreign exchange market which the marketers argued was a disincentive to their participation in the fuel importation business was nothing to worry about.
“There is always a parallel market in every country. There is also an import and export window in every country, even in the developed world.
“But there is always a narrow gap between the two and it takes time for you to have stability in this gap so that you have a low margin between the two for a sustained period, then businesses will thrive.”
He added, “I am very confident that by the end of the first quarter of next year, those margins will narrow and stability will come and you will see others coming into the importation market.”
Meanwhile, the NNPCL has said that projections on crude oil production, and price benchmark of $77.96 in the 2024 budget are realistic and realiseable.
NNPCL Group Chief Executive Officer, Mr. Mele Kyari, gave the assurance during an interactive session with the Senate Committee on Finance at the National Assembly, Abuja, on Wednesday.
In a statement signed by the Chief Corporate Communications Officer of the NNPCL, Mr Olufemi O. Soneye, Kyari said it was unlikely for market prices to drop to $70 dollars per barrel in the market, adding however, that prices could oscillate.
“With what we see in the market today and potentially in the year 2024 and even beyond the next two years, it is very unlikely to see $70 per barrel oil in the market. The oscillation we are seeing, sometimes you do see prices coming down to $75 to the barrel and sometimes it goes above it, overall, benchmarks are averages. We think that the proposal by Mr. President around the $77.96 is still realisable in 2024.”