CBN acknowledges limited control over fuel prices, foreign exchange rates

• PMS demand has decreased by 30% following the recent fuel price hike
• $150 million is spent monthly on PMS importation through CBN intervention
• CBN urges the government to promote local production to address current challenges
  

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The Central Bank of Nigeria revealed on Wednesday that it has limited influence over fuel prices and foreign exchange rates.

Osagie Clement, a principal manager at CBN, made this statement while testifying before the House of Representatives ad hoc committee investigating the recent fuel price hike.

Clement disclosed that the demand for Premium Motor Spirit (PMS) has decreased by 30% due to the price increase.

He also emphasized that $150 million is being spent monthly on PMS importation through CBN intervention, and he urged the Federal Government to promote local production to alleviate current challenges.

“In the PMS market, perhaps it is envisaged that there is no more subsidy, no more bottlenecks. So, it becomes a real market enterprise. More people will come into the business and the competition will bring the price down,” Clement stated.

Furthermore, Ogbugo Ukoha, Executive Director of Distribution Systems at the Nigeria Midstream and Downstream Petroleum Regulatory Agency, informed the ad-hoc committee that market forces of demand and supply dictate the price of PMS.

He emphasized that the Petroleum Industry Act has empowered regulators to intervene, ensuring best practices and preventing unnecessary profiteering.

“PIA has given the authority 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 added.

Earlier, Chairman Babajide Benson of the House of Representatives ad-hoc committee investigating the fuel price hike highlighted that the PIA grants the regulator significant powers to curb profiteering, while expressing concern over the low demand for petrol resulting from the price hike.