The Central Bank of Nigeria (CBN) yesterday told the House of Representatives that it lacks control over the price of Premium Motor Spirit (PMS), popularly known as fuel, and the foreign exchange rate between the naira and dollar.
A principal manager in CBN, Clement Osagie, said this when he appeared before the House ad-hoc committee investigating the recent hike in the price of fuel following federal government's removal of subsidy on the product.
Osagie said the demand for fuel has reduced by 30 percent following the hike in the price occasioned by subsidy removal, disclosing that $150 million was paid for fuel importation monthly from CBN intervention.
Urging the federal government to discourage importation and encourage local production to reduce the current challenges in the nation's economy, he expressed hope that there are positive times ahead in the next four months.
On foreign exchange and price of fuel, Osagie said, "It is a direct or what we call proportional relationship - a direct positive proportional relationship between imported products and exchange rates.
"Specifically, we are speaking of fuel, the PMS, and I believe that it should actually impact on fuel price because after the inauguration of Mr President, he announced that he would like to run a regime of unified exchange rates. And the Central Bank has no other option than to leave the defending model that they were using for exchange and apply a model that will seemingly look like a unified rate in the market.
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"The PMS market, perhaps it is envisaged that there is no more subsidy, no more bottle necks. So, it becomes a real market enterprise. More people will come into that business and you see competition will bring the price down."
On his part, the executive director, Distribution Systems of the Nigeria Midstream and Downstream Petroleum Regulatory Agency (NMDPRA), Ogbugo Ukoha, said, the market forces of demand and supply determine the prices of fuel.
He said the Petroleum Industry Act (PIA) has however given regulators the authority to intervene to avoid cartel building, which is the reason NMDPRA introduced competition to also deal with illegal profiteering.
"PIA has given the authority quite enormous power to intervene to avoid cartel building, which is why we have introduced competition and to also deal with illegal profiteering, and more importantly to work with the Federal Consumers Protection Council in relation to consumer protection," Ukoha said.
In his remarks, chairman of the ad-hoc committee, Babajide Benson, said the lawmakers would continue to make legislative intervention to address the impact of the subsidy regime on the people.
He urged the regulators to ensure effective implementation of the PIA.
"We are not happy because Nigerians are still hurting, feeling the effect of the pump price increase. What can we do? Our job here is to ensure that the increase in price, the impact is drastically attended to and that Nigerians don't face untold hardship. Part of what we are here is to bring the relevant people to account and make them work for Nigerians," he said.
