The Federal Government has cautioned petroleum marketers against using profits from old fuel inventories purchased at higher prices as a justification for keeping pump prices elevated.
Officials stressed that Nigerians should benefit from lower replacement costs as market conditions improve.
The warning was delivered during a stakeholders’ meeting on the cost-reflective pricing of Premium Motor Spirit (PMS), organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja.
The meeting included representatives from the Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission (FCCPC), and the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, stated that while various factors influence fuel pricing, marketers should not sustain high pump prices based on temporary gains from older inventories.
“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,” the minister said.
“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 factors like exchange rates and logistics contribute to pricing, but maintained that downstream deregulation was not intended to facilitate excessive pricing.
He warned that keeping energy costs above market reality could hinder recent economic progress.
“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 while global crude prices saw significant fluctuations—peaking at $118 per barrel in April before dropping to about $71 per barrel—domestic pump price adjustments have not been commensurate.
“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,” he explained.
Lokpobiri directed the NMDPRA to intensify market surveillance and ensure transparency. “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 Chief Executive of the NMDPRA, Rabiu Umar, added that the regulator’s role is to ensure efficiency and protect the public interest.
“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 stated.
