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Petrol still selling below market price in Nigeria – IMF
The International Monetary Fund (IMF) has said that at nearly N1,000 per litre, petrol is still selling below market price in Nigeria.
NNPC had recently increased pump price of fuel from N600 to between N855 and N897 per litre, amid continuing scarcity. But the product sells for as much as N1200 in some states.
Speaking on the development in an interview with Arise TV on Wednesday, the Resident Representative of the IMF in Nigeria, Dr. Christian Ebeke, argued that petrol is still selling below market price.
He, however, urged the Federal Government to prioritize building and accelerating a social safety net that protects vulnerable citizens, while expressing concern that Nigerians are going through significant hardship due to policies being implemented by the present Federal Government.
“I think this upward adjustment of petrol price at the pump comes at a time Nigerians are already feeling significant hardship,” he said.
“There is a lot of pain for Nigerians coming from multiple shocks, compounded shocks, including high inflation, high food inflation. Now, the country is dealing with devastating floods, among others.
“So the upward adjustment to pump rice comes at that particular moment when the economy is also dealing with multiple shocks and Nigerians are feeling this pain.
“I would advise that as we clearly stated in our annual review of the Nigerian economy which we published in May and our advice is very clear.
“It is important to strengthen social protection in Nigeria. It is important to accelerate the mechanism and the disbursement of this support to the most vulnerable, so they can cope with this multiple shocks they are actually facing now.
Speaking further, he said, “The programme the Federal Government has is reaching out to 15 million households, this is the way to go. This programme should be accelerated, cushioning the impact of the pump price policy on the most vulnerable is the immediate priority.
Supporting the earlier position of the NNPC that the current pump prices of petrol were not yet market reflective, Ebeke said: “I think the starting point should be to ensure that there is enough supply stability of this product. The queues that we see at gas stations needs to be addressed.
“We also understand that for a long time, price at the pump has not been reflective of market conditions and this led to challenges to petrol supply and challenging situation also falls for NNPC.
“So our position again is while you are making these adjustments, it is very important to be mindful of the potential impact these have on the most vulnerable. Again, the narrative should really be about how to accelerate support to the most vulnerable, so they can cope with this type of shock.
“Now, if this upward adjustment brings enough supply in the market and have addressed fuel scarcity, this will be a very good development for many Nigerians because the scarcity is not really helping the productive capacity of the country and also with this situation, people normally don’t get a life”.
On Dangote Refinery supply and distribution, Ebeke said the controversy surrounding the earlier claims that NNPCL would be the sole distributor of Dangote Refinery petroleum products was better resolved in favour of consumers if availability and competition were in place.
He stated: “Availability of supply, competition, those are principles that usually work in favour of consumers. They bring good product quality when you have competition, and when you have competition, you ensure that there will be stability of the supply in the market.
“Again, everything that works in favour of those principles is something we will welcome and the market should be a market where the two principles are clearly achieved.
“Stability in supply with competition will ensure that consumers can have the best deal and the best bargain.”
Reacting to the position of the Federal Government that despite the hardship on the citizens, its economic reforms were necessary for a sustainable growth, Ebeke stated: “A constant topic and theme here for us is about how you balance policy.
‘’When it comes to this type of challenging reforms, you have to look at them as packages. You have a package where the first leg is having a clear mechanism to discuss or implement a price modulation for this type of products like petrol but you don’t do it just alone.
“Then you have to blend this first pillar with another one, which is how do you cushion the impact on the most vulnerable.
“So the price adjustments or any effort you are making to resolve the balance sheet problem should be accompanied with something meaningful to the people.
“That is why we see this as a package of policies in the recommendations contained in our annual economic review of the Nigerian economy in May. It clearly stated that those policies should be implemented as packages.
‘’So you have these price modulations that you can design and have a clear and transparent framework for price determination for petroleum price at the pump and also have a robust social safety net programme or a mix of programmes that targets the most vulnerable, so they can really cope with the multiple shocks they face now.”