Tuesday, June 7, 2026 - The Federal Government has warned petroleum marketers against using profits from previously acquired expensive fuel inventories to justify maintaining high petrol prices, insisting that the benefits of lower replacement costs must be passed on to consumers.
The warning was issued on Monday, July 6, during a
stakeholders' meeting on the cost-reflective pricing of Premium Motor Spirit
(PMS) convened by the Nigerian Midstream and Downstream Petroleum Regulatory
Authority at its headquarters in Abuja.
The meeting brought together representatives of Dangote
Petroleum Refinery, the Federal Competition and Consumer Protection Commission,
the Petroleum Products Retail Outlets Owners Association of Nigeria and other
key operators in the downstream petroleum sector.
Speaking at the meeting, the Minister of State for Petroleum
Resources (Oil), Heineken Lokpobiri, said marketers should not rely on
temporary gains from inventories purchased at higher crude oil prices to
sustain elevated pump prices after replacement costs have fallen. “I am aware
that PMS pricing is influenced by several factors beyond crude oil prices, but
it is equally important to distinguish between genuine replacement cost and
windfall gains arising 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 acknowledged that petrol prices are influenced by
factors such as exchange rates, logistics and supply chain costs, but
maintained that deregulation was never intended to create opportunities for
excessive pricing or market distortions. He warned that keeping fuel prices
higher than prevailing market conditions justify could worsen inflation and
undermine the economic gains recorded over the past year.
“When the cost of energy remains elevated beyond what
prevailing market conditions justify, the results translate to inflation. While
considerable progress has been made in moderating inflation from the highs
experienced in 2024, when inflation stood at 34 per cent, the latest figures
show that inflation currently stands at 15.9 per cent. Sustaining high energy
costs where underlying market fundamentals have improved risks undermining
these gains and slowing down the recovery that Nigerians are beginning to
experience.”
The minister noted that international crude oil prices rose
from between $61 and $65 per barrel in January to above $118 per barrel in
April following heightened geopolitical tensions in the Middle East before
declining to about $71 per barrel. According to him, while the increase in
crude prices pushed up petrol prices, the subsequent decline has not been
reflected proportionately at filling stations.
“Ordinarily, such movements in crude oil prices should be
reflected in the pricing of refined petroleum products. While the initial
increase in crude prices understandably exerted upward pressure on PMS prices,
the subsequent moderation in crude oil prices has not translated into a
commensurate reduction in pump prices across the domestic market.
“This disconnect has understandably raised concerns. PMS
peaked at about N1,596 per litre in May and currently sells at around N1,296
per litre. While there has been some reduction, the adjustment has not been
commensurate with the decline in underlying market conditions.”
Lokpobiri commended the reforms introduced by Bola Tinubu,
including the removal of the fuel subsidy and the crude-for-naira initiative,
saying they had laid the foundation for a more competitive downstream petroleum
industry. He directed the NMDPRA to intensify market surveillance and enforce
transparency in fuel pricing.
“I urge the Authority to strengthen market surveillance and
enforce pricing transparency across the supply chain to ensure that reductions
in underlying costs are reflected promptly in ex-depot and retail prices.
Consumers should have confidence that prices are determined fairly and not by
information asymmetry or anti-competitive practices.”
The minister also called for the speedy operationalization
of the National Strategic Stock to strengthen energy security and reduce future
price volatility. Earlier, the Chief Executive of the NMDPRA, Rabiu Umar, said
the meeting was convened to address growing concerns over petrol pricing and
ensure Nigerians benefit from improvements in global market conditions.
“As a responsible regulatory authority, it is our duty to
step in alongside you, our valued partners, to interrogate the market forces,
understand the operational bottlenecks and directly address this disconnect
between falling replacement costs and sustained retail prices. Deregulation is
not a licence for market distortion or unfair consumer pricing. It is intended
to drive efficiency, maximise value and protect the public interest.”
He added that the objective was not to dictate prices but to
work with industry stakeholders to develop practical solutions that would keep
businesses viable while protecting consumers. The meeting continued behind
closed doors, with representatives of major marketers, refiners and industry
associations expected to issue resolutions after their deliberations.
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