The federal government says it will not intervene to regulate petrol prices as escalating geopolitical tensions in the Middle East continue to create volatility in global oil markets.
In an interview with Channels Television on Wednesday, Wale
Edun, the minister of finance, said the federal government plans to introduce
other initiatives to cushion the impact of the geopolitical tensions instead.
Edun said in response to the global developments, President
Bola Tinubu already announced the provision of 100,000 additional compressed
natural gas (CNG) conversion kits to help vehicles switch to CNG fuel, which
costs about 25 to 30 percent of the price of petrol.
He said the government would pursue similar initiatives
“rather than interfering with an orderly market pricing”.
“When there is market failure is where the regulator steps
in. But in terms of balancing pricing, what we are looking to do is to manage
the disruption and we don’t know how permanent or temporary it could be,” Edun
said.
“But in the meantime, rather than reverting back and taking
backward steps, we’ll look at every other measure that we have that can help
the cost of living of Nigerians.”
The Middle East conflict has triggered significant
volatility in global markets as crude oil prices crossed a $100 per barrel on
March 9 — the highest level since July 2022 — before easing to $87 the
following day.
On March 11, the finance ministry said the war in the Middle
East may affect Nigeria’s crude oil and gas prices, capital flows, financial
markets, as well as global logistics and supply costs.
Following the spike in crude oil and ex-gantry petrol
prices, retail stations’ pump prices have skyrocketed, resulting in transport
fares doubling on some major routes in Nigeria.
‘REFINERIES’ PRICING DRIVEN BY MARKET FORCES’
Edun further said the price adjustments by private sector
operators, particularly Dangote refinery, reflect prevailing market conditions.
On Tuesday, Dangote refinery reduced its ex-gantry petrol
price to N1,075 per litre after implementing three earlier increases, although
pump prices remain high.
Commenting on the development, the minister said the
president has entrenched market-based pricing for petroleum products — a system
that had long been absent — adding that the market does not move in only one
direction.
“Dangote reduced their price from, I think, around N1,200 to
now just over N1,000 to N1,050, and
that’s the dynamics of the market,” he said.
“But I think we should be thankful at this time for the
capacity we have in Nigeria to refine crude into petrochemicals and petroleum
products.
“America is just now rushing to open another refinery.
Pakistan, Thailand, in the absence of that capacity, they’re almost closing
down their economies and societies, schools, and sending people home.”
Edun said the resilience currently seen in the Nigerian
economy is largely due to private sector investment in refining, particularly
by Aliko Dangote, president of Dangote Group.
He stressed that the country needs to support its refiners
at this time, just as other nations support theirs, to ensure a steady supply
of petroleum products.
The African Democratic Congress (ADC) had asked the federal
government to introduce a “temporary and time-bound cap” on petrol prices to
prevent further increases that could worsen the cost of living for Nigerians.
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