Refiners, Marketers To FCCPC: Understand Market Before Petrol Price Cut Demand

No Result View All Result Home News Politics Business Sport Football Health Entertainment Education Opinion Editorial Columns Others LeVogue Magazine Conferences National Economy Contact Us Hausa Edition Home News Politics Business Sport Football Health Entertainment Education Opinion Editorial Columns Others LeVogue Magazine Conferences National Economy Contact Us No Result View All Result No Result View All Result Refiners, Marketers To FCCPC: Understand Market Before Petrol Price Cut Demand by Chika Izuora 5 seconds ago in Business Share on WhatsAppShare on FacebookShare on XTelegram Local refiners and petroleum products marketers have faulted the Federal Competition and Consumer Protection Commission (FCCPC) over its demand for lower petrol prices, accusing the agency of failing to understand the workings of the downstream market.

The operators reacted after the commission, on Tuesday, warned refiners and marketers that continued declines in international crude oil prices should translate into lower petrol and diesel prices for consumers.

They urged the FCCPC to engage with industry stakeholders to understand the factors that determine domestic petroleum prices, arguing that crude prices alone do not dictate pump prices.

The refiners also called for the permanent institutionalisation of the crude-for-naira arrangement, with transparent eligibility criteria covering all domestic refineries, including modular facilities, to ensure equitable access to crude supply.

The FCCPC had warned that it would not tolerate anti-competitive practices preventing Nigerians from benefiting from lower production and supply costs.

It said Brent crude had fallen from a September peak of $115 per barrel to below $90 this week, representing a decline of about 20 per cent, and argued that the reduction should begin to reflect in cheaper petrol and diesel.

The FCCPC Executive Vice Chairman and Chief Executive Officer, Tunji Bello, said the commission was monitoring crude price movements and their impact on domestic petroleum prices.

“If the decline in crude prices is sustained, there is no justification for refiners and marketers to continue to keep petrol and diesel prices relatively high,” he said.

“We expect easing in wholesale petrol costs and for the resulting savings to reach consumers at the pump without undue delay.”

Operators: Crude Prices Are Not The Only Factor

However, National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, said pump prices could not be expected to fall below operating costs, stressing that several factors determine retail prices.

He explained that lower international crude prices did not automatically translate into cheaper petrol in Nigeria due to exchange rate volatility, asymmetric price transmission, and downstream operating costs.

According to him, petrol prices tend to rise quickly when crude costs increase but decline more slowly when crude prices fall, partly because marketers must first sell existing stocks purchased at higher prices.

He added that petroleum imports and refining inputs were priced in US dollars, meaning a weaker naira could sustain high domestic landing and wholesale costs even when global crude prices declined.

Similarly, National Secretary of the Petroleum Dealers Association of Nigeria (PEDAN), Ibrahim Shehu Yahaya, said changes in crude prices take days or weeks to be reflected in domestic markets because of the time required for cargo pricing, refining, and depot delivery.

He said pump prices also incorporated refining margins, shipping and transportation costs, handling charges and local taxes, rather than crude oil prices alone.

Yahaya added that infrastructure deficits increased the cost of transporting petroleum products, resulting in price differences across locations.

Refiners: Existing Stocks Bought At Higher Prices

The Crude Oil Refinery Owners Association of Nigeria (CORAN) also faulted the FCCPC’s position, saying that large refiners, including the Dangote Refinery, had purchased crude at higher prices.

The association argued that the effect of lower crude prices could only be fully reflected after existing inventories were exhausted and new supplies were purchased at the reduced rates.

CORAN spokesperson, Eche Idoko, told our correspondent that Nigeria’s expanding domestic refining capacity could face increasing pressure from inadequate and commercially challenging crude supply unless stronger links were established between upstream producers and local refineries.

He said the next phase of petroleum sector reforms should guarantee adequate crude supply to existing refineries on commercially viable terms, alongside improvements in pipelines, storage and evacuation infrastructure.

Idoko called for the full institutionalisation of the naira-for-crude arrangement, with transparent eligibility for all domestic refineries, including modular facilities.

He also advocated a domestic crude pricing framework that reflects crude quality, delivery location and the cost of transporting crude within Nigeria, to ensure that refiners obtain feedstock on commercially sustainable terms.

He urged stronger enforcement of the Domestic Crude Supply Obligation under Section 109 of the Petroleum Industry Act, while allowing producers and refiners to negotiate workable commercial arrangements.

CORAN has also advocated more crude swaps and proximity-based supply arrangements, under which crude from producing areas is supplied to nearby refineries without unnecessary transportation through distant export infrastructure.

The association further called for a gradual reduction in petroleum product imports as local refining capacity expands, with imports restricted to genuine supply shortfalls and strategic stock requirements.

On financing, Idoko proposed a refinery development framework that offers longer-term funding, guarantees, and refinancing for upgrades, expansion, optimisation, and new projects.

He also called for increased investment in shared infrastructure, including pipelines, storage terminals, depots, jetties and rail evacuation systems, warning that inadequate logistics raise operating costs and undermine the competitiveness of locally refined products.

Idoko commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for pursuing a West African regional fuel pricing benchmark to replace foreign indices and better reflect local supply, demand and logistics.

NMDPRA Chief Executive, Rabiu Abdullahi Umar, had said Africa’s expanding refining capacity made it increasingly important for West Africa to develop its own transparent reference price for refined petroleum products.

“Virtually every major energy market in the world operates its own pricing index,” Umar said.

“The more we are able to produce, the more relevant it becomes to have our own reference pricing.”

The initiative comes as several African countries expand refining capacity to reduce dependence on imported fuel and strengthen regional energy security.

Despite being a major producer of crude oil and gas, much of Africa still relies on international benchmarks for petroleum product prices.

The FCCPC’s intervention comes amid mounting pressure on households and businesses over energy costs.

Petrol currently sells for between N1,405 and N1,420 per litre in Abuja and between N1,325 and N1,370 in Lagos.

Figures released by the commission show the difference between current prices and those prevailing before the US-Israel-Iran conflict began in February.

Brent crude closed at $72.48 per barrel on February 27, the day before the conflict started, while petrol sold for between N839 and N925 per litre in Lagos and Abuja.

Marketers have attributed the subsequent increase to market volatility arising from escalating tensions in the Middle East, particularly the blockade of the Strait of Hormuz, which handles at least 25 per cent of global oil traffic.

In a statement issued by its Director of Corporate Affairs, Ondaje Ijagwu, the FCCPC said it would work with the NMDPRA and other agencies to monitor wholesale and retail petrol prices.

Bello warned that the commission would invoke its statutory powers where evidence showed that operators were deliberately preventing price adjustments through anti-competitive practices.

“We are aware of the difficulties high pump prices have caused Nigerians for some time now,” he said.

“Where there is evidence of anti-competitive conduct or unfair practices that prevent consumers from benefiting from lower costs, we will take appropriate action within our mandate.”

While lower crude prices do not automatically translate into immediate reductions in pump prices, particularly when refiners and marketers are still selling higher-cost inventories, the FCCPC’s intervention has put operators under pressure to demonstrate how changing market conditions are reflected in domestic prices.

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