The Federal Government has cautioned petroleum marketers against keeping petrol prices artificially high by relying on profits from old fuel stocks purchased at higher costs, insisting that consumers should benefit from lower replacement costs as global crude oil prices continue to decline.
The warning was issued on Monday during a stakeholders’ meeting on cost-reflective pricing of Premium Motor Spirit (PMS), organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) at its headquarters in Abuja.
The meeting brought together major stakeholders in the downstream petroleum sector, including representatives of the Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission (FCCPC), the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), and other industry players.
Also present were chief executives and representatives of TotalEnergies, Eterna Plc, Matrix Energy Group, the Depot and Petroleum Products Retailers Association of Nigeria (DAPPMAN), 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), the Nigerian Association of Road Transport Owners (NARTO), as well as officials of the NMDPRA.
Addressing participants, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said marketers should not continue to justify high pump prices with inventories acquired when crude oil prices were significantly higher.
He stressed that once marketers begin replacing old stocks with products bought at lower costs, the resulting savings should be reflected in ex-depot and retail pump prices, in line with the objectives of a competitive deregulated market.
“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,” he stated.
Lokpobiri acknowledged that petrol prices are affected by other variables such as foreign exchange rates, logistics and supply chain expenses, but maintained that these should not be used to justify excessive pricing once replacement costs have fallen.
According to him, the Federal Government remains committed to safeguarding consumers following the removal of fuel subsidy, noting that deregulation was introduced to promote efficiency, encourage competition and ensure value for Nigerians, not to create room for excessive pricing or market distortions.
The minister also warned that maintaining fuel prices above prevailing market realities could fuel inflation and erode the progress already made in stabilising the economy.
He noted that energy costs influence virtually every sector, including transportation, food and manufacturing, making fair fuel pricing critical to sustaining economic recovery.
“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,” he added.
Lokpobiri explained that international crude oil prices, which ranged between $61 and $65 per barrel in January, climbed above $118 per barrel in April following geopolitical tensions in the Middle East before dropping to about $71 per barrel as the situation eased.
He observed that while the earlier surge pushed domestic petrol prices upward, the subsequent decline in crude prices had 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,” the minister said.
While commending the economic reforms of President Bola Tinubu, Lokpobiri said initiatives such as fuel subsidy removal, the crude-for-naira arrangement and other executive interventions had positioned the downstream petroleum sector for greater competition and investment.
“The Federal Government remains unwavering in its commitment to protect public interest post-deregulation.
Deregulation was never intended to create opportunities for excessive pricing or market distortions but rather to promote efficiency, deepen competition and ultimately deliver value to Nigerians,” he said.
The minister directed the NMDPRA to strengthen market surveillance and ensure transparency in pricing across the petroleum supply chain.
“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.”
He also urged the immediate operationalisation of the National Strategic Stock, describing it as an important tool for improving energy security and cushioning the impact of future price shocks.
“The National Strategic Stock will strengthen national energy security, reduce exposure to supply disruptions and moderate price volatility. There is urgency in ensuring that this mechanism becomes fully operational,” he said.
In his opening remarks, the Chief Executive of the NMDPRA, Rabiu Umar, said the meeting was convened on the directive of the minister to address concerns over petrol pricing and ensure that consumers benefit from improving global market conditions.
He pointed to the recent engagement between regulators and operators in the domestic gas sector, which he said had already resulted in lower liquefied petroleum gas prices.
“Just two weeks ago, many of us gathered in a similar forum to discuss the domestic gas sector. The candid dialogue and the actionable wins we secured during that session are already bearing fruit.
Notably, we have seen LPG prices coming down significantly across the market, and we look forward to seeing even more reduction within the next two weeks.
“It is exactly this kind of tangible success that inspired today’s gathering. When regulators and industry operators sit at the same table, we do not just debate challenges, we engineer solutions,” he said.
Umar expressed concern that despite the recent moderation in international crude oil prices, domestic retail fuel prices had not adjusted accordingly.
“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.
“Sustainable profitability for marketers and consumer welfare are not mutually exclusive. We need to build a transparent ecosystem where the benefits of market improvements are passed down to the Nigerian consumer in a timely and fair manner,” Umar added.
He explained that the objective of the engagement was not to fix petrol prices but to work with operators to develop practical solutions that would protect consumers while ensuring the sustainability of businesses.
The meeting later proceeded into a closed-door session involving key stakeholders, with resolutions expected after the deliberations conclude.