Federal Government don direct Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, to make sure petroleum marketers no dey exploit Nigerians through excessive pricing for deregulated downstream petroleum market.
Minister of State for Petroleum Resources, Senator Heineken Lokpobiri, give the directive for Abuja yesterday while delivering keynote address at NMDPRA General Counsel and Legal Advisers Forum. The two-day forum theme na: “Beyond Compliance: Driving Regulatory Certainty and Investment Confidence in Nigeria’s Petroleum Sector.”
Lokpobiri talk say although downstream sector don fully deregulate, regulator must ensure say deregulation no become avenue for profiteering at expense of consumers. According to am, following de-escalation of tensions for Middle East and decline for global crude prices, Nigerians expect corresponding reductions for pump price of Premium Motor Spirit, wey dem dey call petrol.
However, dis one no don happen, as refiners and marketers continue to sell petrol at elevated pump prices despite significant decline for crude oil prices from peak of $120 per barrel to about $72 per barrel last week.
He say: “Following de-escalation of tensions between Iran and United States, we expect to see commensurate downward adjustment for prices of PMS and other petroleum products. However, that no don happen yet. While we believe say market forces go eventually restore equilibrium, the regulator also get statutory responsibility to ensure say deregulation no become avenue for profiteering. Dis one must dey done according to extant provisions of Petroleum Industry Act.”
The minister also charge the agency to intensify monitoring to ensure consumers receive correct quantity of fuel wey dem buy for filling stations.
Lokpobiri ask: “Beyond allowing prices to dey determined by market forces, the question na: wetin the regulator dey do to ensure consumers receive correct quantity of product? When person pay for 10 litres of Premium Motor Spirit, dem suppose receive exactly 10 litres, no less.”
Lokpobiri note say despite recent geo-political tensions from conflict involving United States and Iran, Nigeria no experience fuel shortages. He attribute the stability to deregulation of downstream sector and operationalisation of domestic refineries.
He describe Petroleum Industry Act, PIA, as foundation for transforming Nigeria’s petroleum industry but stress say building investor confidence now depend on consistent and predictable regulation.
He say: “The PIA give us the architecture. Wetin we must now build na the culture, the institutional habits, the interpretive discipline and the regulatory character wey make the law’s objectives real for every investor wey dey evaluate Nigeria against any other destination for the world.”
The minister urge legal advisers and general counsel for petroleum industry to serve as strategic partners for promoting investment, rather than becoming obstacles through unnecessary regulatory bottlenecks.
According to am, “we no go dey judged by number of regulations we produce or volume of guidelines we issue. We go dey judged by investments we attract, the businesses we enable, the jobs we create and the value we leave behind for future generations.”
Earlier, Chief Executive of NMDPRA, Mallam Rabiu Umar, talk say petroleum industry don reach stage where regulatory certainty, transparency and investor confidence don become more important than mere compliance with regulations.
Umar say implementation of PIA shift focus from wetin the law provide to how e dey implemented and whether e dey deliver the certainty wey investors require.
He say: “Compliance remain the foundation. The broader objective na to create petroleum industry wey dey characterised by certainty, predictability, transparency and confidence.”
For im presentation, Secretary and Legal Adviser of NMDPRA, Dr Joseph Tolorunse, explain say regulatory certainty don ensure stability of fiscal rules throughout lifespan of projects and prevent policy reversals. Tolorunse note say the law don make Nigeria’s oil and gas industry more competitive, adding say increased competitiveness go attract investment, with “investment leading to growth.”
Meanwhile, Nigeria’s downstream petroleum sector continue to record marginal movements for petrol prices across major depots for Lagos, Port Harcourt, Calabar and Warri yesterday, reflecting continued market adjustments among petroleum marketers and depot operators.
The latest mid-day market data show say PMS depot prices remain largely stable, with most locations recording slight reductions of between N1 and N6 per litre, while few depots maintain unchanged prices.
For Lagos, one of Nigeria’s major petroleum trading hubs, PMS prices across several terminals record downward adjustments. African Terminal reduce im PMS price from N1,125 to N1,122 per litre, representing N3 decline, while AIPEC adjust im price from N1,125 to N1,124 per litre. Other Lagos-based facilities, including AITEO, BONO, EMADEB and TECHNO OIL, also record marginal reductions. EMADEB post the biggest decline among Lagos terminals, cutting price from N1,125 to N1,119 per litre, reduction of N6.
The Lagos market continue to reflect impact of increased domestic refining capacity and stronger competition among suppliers, particularly following growing role of local refiners for meeting national fuel demand.
For Port Harcourt, depot prices also record mixed movements. Automotive Gas Oil, AGO, wey dem dey call diesel, witness notable changes, with some terminals increasing prices. African Terminal’s AGO price rise from N1,435 to N1,503 per litre, representing increase of N68. Duport also increase im price from N1,435 to N1,503 per litre, while Menj and Wosbab record similar increases of N63 per litre. However, some operators reduce diesel prices. Matrix and Sigmund depots lower AGO prices by N20 per litre, reducing dem from N1,505 to N1,485 and from N1,503 to N1,483, respectively. For PMS for Port Harcourt, prices remain relatively stable, with several depots trading within N1,120–N1,126 per litre range.
The Calabar market also record modest adjustments. Fynfield reduce im PMS price from N1,145 to 1,140 per litre, while Soroman maintain im price at N1,140 per litre. For Warri, PMS prices remain largely stable with slight downward adjustments. Matrix reduce price from N1,135 to N1,133 per litre, while Nepal adjust from N1,133 to N1,132 per litre. Prudent also cut price from N1,135 to N1,133 per litre.
The latest depot price trends indicate relatively stable downstream market, with PMS prices showing signs of moderation for several locations despite ongoing fluctuations for diesel prices.
Managing Director of 11 Plc, Osagie Ogedegbe, say Dangote Refinery currently play dominant role for determining petrol prices for the country. He say: “Everybody dey get petrol from Dangote and dey sell at the price wey e advise. Dis one na outcome of country wey get just one refinery. However, the price go soon begin decline because there don dey stability for the country’s exchange rate. Despite the Middle East crisis, wey no still fully resolve, there dey hope say with steady decline for crude oil prices for international market, the price of petrol go gradually nosedive. I dey very optimistic say the price go dey reviewed downward between now and next week if the exchange rate remain stable and crude oil prices continue to fall.”
Also speaking, energy expert and Lead Strategic Consultant at Acepontis Ltd, Atiemoria Ebhodaghe, say: “Nigerian pump prices remain high despite falling global crude oil prices largely because of the ‘rockets and feathers’ market phenomenon, where marketers dey quick to raise prices when crude oil prices increase but deliberately delay passing savings to consumers when prices fall until old, expensive inventory don exhaust. We suppose also understand say while Dangote Refinery now dey purchase local crude for naira, the valuation of that crude remain pegged to global dollar market, meaning say the depreciation of the naira continue to inflate baseline production costs. However, the decline for international crude oil prices indicate say relief dey structurally on the way, as evidenced by recent cuts for wholesale gantry prices and NNPC’s reduction of im retail price to roughly N1,210 per litre for Abuja. Ultimately, until the naira strengthen and stricter regulatory compliance compel independent marketers to align with new landing costs, the average Nigerian consumer go continue to experience delays for price reductions and pay high prices for filling stations.”
Also speaking, operator for Major Energies Marketers Association of Nigeria, MEMAN, wey plead anonymity, say pump prices dey expected to decline gradually because marketers still dey recover losses wey dem incur over past 18 months. “The price dey expected to go down slowly because marketers dey try to recover dema losses. Marketers don record very significant losses over the last 18 months. Losses dey occur throughout supply chain every time prices fall. Marketers therefore dey reduce prices as gradually as possible to recover as much as dem fit. When prices increase, marketers enter the new price into dema Enterprise Resource Planning, ERP, system, wey immediately reflect the value of stock available before dem begin sell. The reverse dey happen whenever prices fall. Dis one na standard practice for every trading business. Wetin Dangote Refinery fit do na try as much as possible to keep costs low, but e no go absorb your losses, neither Dangote go subsidise dem,” he talk.
Despite significant decline for global crude oil prices and reduction for petroleum product prices at depots across Nigeria, petrol prices for filling stations don remain largely unchanged, raising concerns among industry stakeholders over slow response of downstream operators. Mr Olitide Jeremiah talk say the industry still dey await corresponding response from downstream operators. He say: “Despite the significant drop for crude oil prices and depot prices across Nigeria, the prices of petrol and other petroleum products don remain high for filling stations. We still dey wait to see how downstream operators go respond to developments for global market and at depots.”
National President of Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, attribute slow adjustment of pump prices to absence of fully responsive deregulated downstream petroleum market. According to am, price adjustments for Nigeria’s petroleum market don historically dey quicker when prices rise than when dem decline. He say: “We no get very dynamic downstream market yet. Once prices go up for Nigeria, e no always easy to bring dem down and stabilise the market.”
Meanwhile, Nigeria Labour Congress, NLC, don blame Federal Government for apparent refusal of marketers to reduce pump price of petrol, despite sustained decline for crude oil prices for international market. Reacting yesterday, NLC official wey speak to Vanguard on condition of anonymity, say Nigerians suppose hold Federal Government accountable for wetin the Congress describe as excessive powers wey marketers dey exercise for downstream petroleum sector. The official say: “We warn government against creating monopoly for downstream petroleum industry. Unfortunately, our fears don now dey confirmed. We no dey surprised by the greed wey marketers dey display because na government empower dem. Nigerians suppose hold government responsible for the excessive powers wey marketers dey exert for downstream petroleum sector.”
The NLC argue say genuine deregulation fit only exist where there dey healthy competition, transparency and effective regulation, no where few dominant players dey allowed to dictate prices without regard to prevailing market realities. “How person fit claim say the sector don dey deregulated without first creating conducive environment for competition? Wetin we get today no be competitive market but monopoly wey don dey allowed to thrive unchecked. The government don allow monopoly to grow out of control for the sector, and ordinary Nigerians dey pay the price,” the Congress say.
The labour centre note say with decline for global crude oil prices and improvements for other market indicators, Nigerians suppose ordinarily dey benefit from lower fuel prices. According to NLC, the continued refusal by marketers to reduce pump prices raise serious concerns about effectiveness of current deregulation framework and whether e dey serve interests of consumers or privileged few. The Congress recall say e don consistently warn against policies wey concentrate excessive market power for hands of few operators, stressing say such arrangement go inevitably lead to price manipulation and profiteering at expense of public. The NLC urge Federal Government to take immediate steps to dismantle monopolistic practices for downstream petroleum sector, promote genuine competition and strengthen regulatory oversight to ensure say Nigerians benefit from favourable developments for international oil market.
