NMDPRA addresses petrol price hike and its effects

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has recognized the financial burden caused by the recent rise in petrol prices. The price of Premium Motor Spirit (PMS), which we commonly call petrol, has gone up, affecting many Nigerians.

The authority stated that it understands how this price increase impacts families, transport workers, and businesses across the country. In a statement released on Saturday, the NMDPRA said it is focused on protecting consumers in Nigeria's deregulated petroleum market.

"We are fully sensitive to the pressure this places on households, transport workers, and businesses across the country, and we share in the commitment to seeing relief take root as market conditions stabilize," the authority mentioned.

This statement comes as petrol prices have surpassed N1,400 per litre in many areas. The latest rise followed an N85 increase in the gantry price of petrol by Dangote Petroleum Refinery, moving from N1,265 to N1,350 per litre, due to a spike in international crude oil prices.

A visit to filling stations in Abuja on Saturday morning revealed that pump prices varied widely. Some stations sold petrol for between N1,400 and N1,450 per litre. Just last month, prices ranged from about N1,200 to N1,300 per litre.

This price increase happened after a time when petrol prices had started to decrease. Many expected that the conflict in the Middle East would calm down, easing shipping disruptions through the Strait of Hormuz.

Even though Nigeria is a big producer of crude oil, the country is still affected by what happens in the global oil market. Changes in international crude prices can impact the local petroleum market due to costs like crude feedstock, refined products, freight, and other supply-chain expenses.

The rise in the Dangote Refinery’s wholesale petrol price has led to higher prices at filling stations. On Friday, Brent crude, the international benchmark for Nigeria’s oil market, closed at $104.87 per barrel, according to Reuters.

Shipping disruptions through the Strait of Hormuz are a big worry for global energy markets. This waterway is crucial for shipping crude oil and refined products. For Nigeria, changes in the international oil market can affect transportation costs, logistics, electricity generation, and other activities that depend on petroleum products.

The NMDPRA explained that its role in the downstream petroleum sector is based on the Petroleum Industry Act (PIA) 2021. Section 205(1) of the Act states that wholesale and retail prices of petroleum products should rely on free-market pricing.

"The Authority does not fix pump prices or issue administrative price templates," it stated. The authority noted that Sections 205(2)-(4) limit government intervention in pricing to exceptional situations where there is clear evidence of a market failure. "No such market failure has been declared," the authority added.

Additionally, Section 216 of the PIA gives the authority power to prevent unfair practices, price-fixing, and abuse of market dominance. The NMDPRA mentioned it is collaborating with the Nigeria Customs Service and other security agencies to improve surveillance along border areas.

This effort aims to stabilize supply and prevent illegal cross-border diversion of petroleum products. The NMDPRA emphasized that deregulation does not free petroleum operators from following regulations or fair-trade standards.

The authority is working with the Federal Competition and Consumer Protection Commission (FCCPC) under a formal agreement to keep an eye on the market. Both agencies are investigating claims of price-gouging, collusion, under-dispensing, and poor product quality.

The NMDPRA also mentioned it is setting up channels for feedback and reporting. This will allow the public and industry stakeholders to report any irregular pricing and unfair trade practices for further action. The NMDPRA said it is dedicated to ensuring energy security, promoting fair competition, and protecting consumers under the PIA.