Emmanuel Addeh in Abuja
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday explained that pricing of petroleum products in the downstream petroleum sector was governed by the unrestricted free market provisions of the Petroleum Industry Act (PIA).
The agency, while acknowledging the financial pressure caused by the recent increase in the price of petrol, said its mandate was to regulate the market, protect consumers and ensure fair competition rather than administratively determine prices.
The NMDPRA, in a statement in Abuja, stated that section 205(1) of the PIA 2021 provides that wholesale and retail prices of petroleum products shall be based on unrestricted free market pricing conditions.
In recent times, petrol prices have surged to as much as N1,500 per litre across several regions of Nigeria, stemming primarily from a sharp rally in global crude oil benchmarks, which have traded past $100 per barrel.
This latest price hike has intensified pressure on Nigerian households and commercial enterprises, prompting calls from labour unions for targeted government interventions.
Transporters in major commercial hubs have responded by raising public transit fares by 30 to 50 per cent, directly translating into higher food transport costs and increased inflationary pressure.
But, according to the NMDPRA, sections 205(2) to (4) limited government intervention in petroleum pricing to exceptional circumstances where there was formal evidence of a ‘declared market failure’, noting that no such market failure has been declared.
It stated that Section 216 of the PIA empowers it to prevent anti-competitive practices, price-fixing and abuse of market dominance.
The NMDPRA said it was nevertheless sensitive to the difficulties arising from the recent increase in petrol prices, particularly for households, transport workers and businesses across the country.
“We are fully sensitive to the pressure this has placed on households, transport workers, and businesses across the country, and we share in the commitment to seeing relief take root as market conditions stabilise,” it stated.
On measures to safeguard supply and consumers, the agency said it was working with the Nigeria Customs Service (NCS) and other security agencies to intensify surveillance along border corridors and curb the illegal diversion and smuggling of petroleum products.
It also stressed that deregulation did not exempt operators from regulatory compliance or fair-trade standards.
The regulator said it was collaborating with the Federal Competition and Consumer Protection Commission (FCCPC) under an existing Memorandum of Understanding (MoU) to monitor the market for price-gouging, collusion, under-dispensing and compromised product quality.
The NMDPRA further said it was opening dedicated feedback and reporting channels through which members of the public and industry stakeholders could report irregular pricing and other exploitative trade practices for investigation and enforcement.
“The NMDPRA remains steadfast in fulfilling its statutory mandate to ensure energy security, foster fair competition, and protect consumers within the PIA’s legal framework,” it added.