Middle East war: FG won’t control petrol prices, says Finance Minister

The federal government says it will not intervene toregulate petrol prices as escalating geopolitical tensions in the Middle Eastcontinue to create volatility in global oil markets. In an interview with Channels Television on Wednesday, WaleEdun, the minister of finance, said the federal government plans to introduceother initiatives to cushion the impact of the geopolitical tensions instead. Edun said in response to the global developments, PresidentBola Tinubu already announced the provision of 100,000 additional compressednatural gas (CNG) conversion kits to help vehicles switch to CNG fuel, whichcosts 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 stepsin. But in terms of balancing pricing, what we are looking to do is to managethe disruption and we don’t know how permanent or temporary it could be,” Edunsaid. “But in the meantime, rather than reverting back and takingbackward steps, we’ll look at every other measure that we have that can helpthe cost of living of Nigerians.” The Middle East conflict has triggered significantvolatility in global markets as crude oil prices crossed a $100 per barrel onMarch 9 — the highest level since July 2022 — before easing to $87 thefollowing day. On March 11, the finance ministry said the war in the MiddleEast may affect Nigeria’s crude oil and gas prices, capital flows, financialmarkets, as well as global logistics and supply costs. Following the spike in crude oil and ex-gantry petrolprices, retail stations’ pump prices have skyrocketed, resulting in transportfares doubling on some major routes in Nigeria. ‘REFINERIES’ PRICING DRIVEN BY MARKET FORCES’ Edun further said the price adjustments by private sectoroperators, particularly Dangote refinery, reflect prevailing market conditions. On Tuesday, Dangote refinery reduced its ex-gantry petrolprice to N1,075 per litre after implementing three earlier increases, althoughpump prices remain high. Commenting on the development, the minister said thepresident has entrenched market-based pricing for petroleum products — a systemthat had long been absent — adding that the market does not move in only onedirection. “Dangote reduced their price from, I think, around N1,200 tonow just over N1,000 to N1,050, andthat’s the dynamics of the market,” he said. “But I think we should be thankful at this time for thecapacity we have in Nigeria to refine crude into petrochemicals and petroleumproducts. “America is just now rushing to open another refinery.Pakistan, Thailand, in the absence of that capacity, they’re almost closingdown their economies and societies, schools, and sending people home.” Edun said the resilience currently seen in the Nigerianeconomy is largely due to private sector investment in refining, particularlyby Aliko Dangote, president of Dangote Group. He stressed that the country needs to support its refinersat this time, just as other nations support theirs, to ensure a steady supplyof petroleum products. The African Democratic Congress (ADC) had asked the federalgovernment to introduce a “temporary and time-bound cap” on petrol prices toprevent further increases that could worsen the cost of living for Nigerians.

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