Speaking on the latest price hike, oil and gas governance expert, Mr. Henry Adigun said it was not a surprise as the old pump price of N537 per litre was not the real market price.
Mr. Adigun pointed out that NNPC was able to sell at that old rate because it had old stock of foreign exchange and old stock of petrol, disclosing that the actual pump price was closer to N710 per litre given the low value of the Naira.
He explained: “You need to understand this, when NNPC was selling petrol at N540 per litre, that wasn’t the price that was market determined. That was still subsidised pricing because at that point, NNPC was using dollar artificial rate to sell petrol.
“As we speak today, no importer is importing petrol into the country, do you know why? Because if they do, they cannot land at the price NNPC was retailing it. That is why for the past few months, NNPC has being the sole importer of petrol. When NNPC is now looking at the market and they know that there is no old stock of dollars to augment purchase, they are reflecting the true market price.
“NNPC typically gets their dollars from selling our crude and then they remit to the government in local currency. At the point of deregulation exchange rate was N700 -N705 to the dollar but they were remitting at N455 to the government. When the government devalued the currency, the Naira fell to N785 and at that point NNPC began selling petrol at N537 in Abuja and N490 in Lagos. That was not also the real market value because they still had old stock of currency and old stock of supply that made them to use virtual value of N550 to the dollar. That’s why every other importer outside NNPC who couldn’t buy dollars at a cheaper rate couldn’t supply”, he added.
He expressed optimism that with other oil marketers involved in the importation of the product, prices would eventually decline, as it has happened with diesel.
While faulting the communication strategy of the government, he stressed that the “government is not communicating effectively and citizens have rights to question what the government is doing”.
Adigun said it was critical that the government intervenes to ameliorate the hardship faced by the poor across the country by introducing a publicly funded transport system and efficient cash transfer policy that captures more of Nigeria’s poorest of the poor.
