FG Cracks Down: Marketers Warned Against High Petrol Prices, Old Stock Excuses
The Federal Government has cautioned petroleum marketers against maintaining high fuel pump prices based on old, expensive inventories, urging them to pass reduced replacement costs to consumers. This directive follows a crucial NMDPRA meeting addressing the disconnect between declining crude oil prices and sustained elevated domestic fuel costs. The government emphasizes market transparency and fairness to curb inflation and protect public interest.The Federal Government of Nigeria has issued a stern caution to petroleum marketers, urging them not to leverage profits from old, higher-priced fuel inventories to justify maintaining elevated pump prices. This warning emphasizes that Nigerian consumers should benefit from reduced replacement costs as market conditions improve and crude oil prices decline. The admonition was delivered during a crucial stakeholders’ meeting focused on the cost-reflective pricing of Premium Motor Spirit (PMS), organized by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) at its headquarters in Abuja.
The meeting saw the attendance of key players in the downstream petroleum sector, including representatives from Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission (FCCPC), the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), TotalEnergies, Eterna Plc, Matrix Energy Group, the Depot and Petroleum Products Retailers Association of Nigeria, the Major Energy Marketers Association of Nigeria (MEMAN), the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), the Independent Petroleum Marketers Association of Nigeria (IPMAN), and the Nigerian Association of Road Transport Owners (NARTO), alongside NMDPRA officials.
Speaking at the event, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, acknowledged that while various factors influence petrol retail prices, marketers should not sustain pump prices based on temporary gains from inventories acquired when crude oil prices were significantly higher. He stressed the importance of distinguishing between genuine replacement costs and windfall gains from inventory management. “Temporary gains realised from inventories acquired at higher prices should not become the basis for sustaining elevated pump prices after replacement costs have declined. As inventories are replenished at lower costs, the benefits of those lower costs should be transmitted to consumers in a timely and transparent manner. That is the essence of a competitive and efficiently functioning market,” Lokpobiri stated.
The Minister also recognized the impact of exchange rates, logistics, and supply chain costs on fuel pricing, but firmly asserted that the deregulation of the downstream sector was never intended to foster excessive pricing or market distortions. He warned that maintaining fuel prices above prevailing market realities could exacerbate inflation, risking the economic progress achieved, with inflation currently standing at 15.9 per cent after reaching 34 per cent in 2024. He detailed how global crude oil prices surged from $61-$65 per barrel in January to over $118 in April due to geopolitical tensions, before moderating to approximately $71 per barrel. Despite this decline, the corresponding reduction in domestic pump prices has not been adequately reflected, with PMS peaking at N1,596 per litre in May and currently hovering around N1,296 per litre, still not commensurate with underlying market improvements. Before the Middle East hostilities, PMS was sold at N700-N800 per litre, and as of yesterday, Brent crude was priced at $71.98 per barrel, yet fuel sells for over N1,100 in Lagos and N1,300 in the Northern part of the country.
Lokpobiri commended President Bola Tinubu’s reforms, including the removal of fuel subsidy and the crude-for-naira policy, which have strengthened competition in the downstream industry. He directed the NMDPRA to enhance market surveillance and enforce pricing transparency across the supply chain, ensuring that cost reductions are promptly passed on to ex-depot and retail prices. Consumers, he emphasized, must have confidence that prices are determined fairly, free from information asymmetry or anti-competitive practices. He further advocated for the swift operationalization of the National Strategic Stock to bolster the country’s energy security and cushion future price volatility.
Earlier, Rabiu Umar, the Chief Executive of the NMDPRA, explained that the meeting was convened due to escalating public concerns over petrol pricing despite declining international market indicators. He affirmed the authority’s responsibility to collaborate with partners to investigate market forces, understand operational bottlenecks, and directly address the disconnect between falling replacement costs and sustained retail prices. Umar reiterated that deregulation is not a license for market distortion or unfair consumer pricing, but rather aims to drive efficiency, maximize value, and protect public interest. He stressed the importance of building a transparent ecosystem where the benefits of market improvements are timely and fairly transmitted to the Nigerian consumer, ensuring sustainable profitability for marketers and safeguarding consumer welfare.