After a thorough evaluation of global oil price trend, experts have predicted that the full deregulation of Nigeria’s oil industry by the Federal Government and entrance of private refineries into the sector would in few weeks force a sharp reduction in fuel price across the country.
The experts said that deregulation and entrance of private refineries would bring competition into the industry and ensure that price was determined by forces of demand and supply rather than been fixed by an organisation.
According to the experts, deregulation would ultimately favour consumers as soon as the industry stabilizes and prices begin to record a downward trend occasion end by availability of the product.
The experts’ stance came barely 24 hours after an increase in fuel price from N145 to N151, following Federal Government decision to abolish subsidy regime in the country’s oil sector.
In a separate interview over the hike in fuel price, the experts which include Major Oil Marketers Association of Nigeria (MOMAN), NIPCO Plc and others, argued that the government action on subsidy removal was healthy for the country’s downstream sector and the economy.
MOMAN chairman, Adetunji Oyebanji, in an interview with newsmen, noted that deregulation would afford operators the opportunity to recover their costs and later encourage influx of investors and create employment.
Oyebanji, while applauding the government on its decision to allow market forces to determine prices, stated that the magnitude of the increase, timing, and location would be determined by each individual company.
Explaining that prices at the pump would require adjustment to reflect realities of the increase of ex-depot prices by the Petroleum Product Marketing Company (PPMC), he appealed to the Ministry of Petroleum Resources to intensify its public enlightenment campaign and educate Nigerians on benefits ahead.
“The Ministry of Petroleum Resources should also be telling Nigerians that we can no longer afford subsidy. If we keep it, the investment in infrastructure, health, education, etc., will not be possible. We are borrowing so much to finance our budget. We spent over a trillion naira on subsidy last year. It is unsustainable’’, he said.
Another stakeholder in the downstream sector, Chairman of SY Petroleum Limited, Sani Yau, emphasized that the price hike was a reflection of trending realities in the sector and noted that deregulation would foster an eventual price reduction particularly when other market fundamentals would converge to create the desired competitive market space.
An independent marketer, John Agidigan, explained that the reduction in oil price experienced months ago was created by market forces and that a further reduction could be experienced in the country with the subsidy removal.
Agidigan explained that under a deregulated environment, prices are expected to rise and fall in response to the volatility of demand and supply.
He noted that before the new price adjustment, market forces had compelled the price per litre down to N121, then up to N131 and later N148.
According to him, the new deregulated regime would always ensure the availability of the product in the market at an affordable price based on the supply, adding that this regime was better than what obtained in the past when Nigerians had to contend with extreme scarcity and its attendant challenges such as long queues at fuel stations.
Also, Aggrey Koleijo, a stakeholder in the sector, argued that Nigerians must consider the benefits of the new pricing regime rather than just reacting to the price increase which could be reversed the moment market forces dictate otherwise.
He stated that the same market forces that brought about price reduction not long ago were still responsible for the hike and can still ensure a reduction, depending on the demand and supply activities within the Industry.
An oil analyst, Dr. Mac Udiewe, said the price of fuel would surely go down in a few months’ time when the supply of the product would increase geometrically with the entrance of products from private refineries such as the Dangote Refinery and other modular refineries.