The CEO of the Nigerian National Petroleum Company Limited, Mele Kyari, has justified the company’s existing monopoly in fuel importation, asserting that oil marketers withdrew from the activity due to price volatility.
Speaking before the Senate Committee on Finance on Wednesday at the National Assembly complex, Kyari explained that oil marketers found it challenging to navigate the price fluctuations in the downstream sector, leading them to opt out of fuel importation.
Petroleum marketers, including the Independent Petroleum Marketers Association of Nigeria, private depot owners (known as the Depot and Petroleum Marketers Association of Nigeria), and the Major Marketers Association of Nigeria, have reportedly abstained from fuel importation due to the volatility in exchange rates.
However, the Group Chief Executive Officer of NNPC, Mele Kyari, dismissed these concerns, assuring lawmakers that there were no issues 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 also asserted that the disruption in the foreign exchange market, which marketers argued was discouraging their involvement in the fuel importation business, should not be a cause for concern.
“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 NNPC has affirmed that the projections for crude oil production and a price benchmark of $77.96 in the 2024 budget are both realistic and achievable.
Mele Kyari, the Group Chief Executive Officer of NNPC, provided this assurance during an interactive session with the Senate Committee on Finance at the National Assembly in Abuja on Wednesday.
According to a statement by Mr. Olufemi O. Soneye, the Chief Corporate Communications Officer of NNPC, Kyari expressed confidence that market prices were unlikely to drop to $70 per barrel but acknowledged the possibility of price fluctuations.
“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.”