The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has articulated that the competitive price modulation in the oil and gas sector will force down the pump price of petrol within the next six months.
Kachikwu, accordingly, foresees a fall in the pump price of Premium Motor Spirit (PMS) in the next four to six months from the competition in the PMS Price modulation.
Meanwhile, it is not clear how this will be achieved because the price modulation is an exclusive activity of the federal government not that of competitive market where production has been opened to competing investors. Surprisingly, the minister derived his conjecture from the relative reduction of the price of diesel, which he attributes to trading skills of the dealers, forgetting that diesel does not have the same consumption rate with PMS in the country.
Presenting his scorecard on his two years in office in a podcast released in Abuja on Thursday, Kachikwu urged Nigerians not to undermine the present prices of the product, taking a cue from the prices of diesel which is 40% down and recording surplus supply as evidence that the petrol prices will also crash.
According to the minster, “Once Nigerians throw their trading skill in, once competition thrives, the prices will continue to tumble.
“My guess is that you will see the prices tumble in the next four, five to six months. The market will be more stable and definitely the prices will be lower than what we see today.”
Kachikwu revealed his confidence in the petroleum downstream sector, remarking that in the last 10 years, this is the first time that the three refineries are working simultaneously, although at 50 % of their capacity.
He stated: “We expect to put in investment to put them to 90% capacity.”
Kachikwu further noted that this is the first that the NNPC group of companies are recording savings which could be used to address the issue of the refineries alongside the Joint Venture Partners adding that government is upgrading the depots to extent that of the 19 only three are not functioning at the moment.
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Expressing hope of improvement in the petroleum industry, the minister said: “The time has come to take on the problem bullishly and that is what we are trying to do. So, we believe the ire will be money for infrastructural development in the downstream sector. continued.
“We believe that a lot of the companies will jump up now and be able to sell at the right prices and not the pump down by the problem of price control and will be able to grow their businesses. We believe that most of them efficient ones will drive prices southward rather than northward.
“And we believe that almost 200,000 jobs will be created in this sector and over 400,000 jobs will be saved which would have been lost if we had continued on the path we were in.”