Federal Government Orders Marketers to Reduce Petrol Prices in Line with Falling Crude Oil Costs
The Federal Government has directed petroleum industry regulators, operators and marketers to ensure that the retail price of Premium Motor Spirit (PMS), popularly known as petrol, reflects the sharp decline in global crude oil prices in line with the principles of a deregulated market.
The government described it as unacceptable for petrol prices to remain disproportionately high despite the significant drop in international crude oil prices, warning that consumers should not continue to bear the burden of outdated pricing.
The directive was issued on Monday during a stakeholders’ meeting on cost-reflective petrol pricing held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja.
The meeting was chaired by the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, and attended by key industry stakeholders, including officials of the NMDPRA, representatives of Dangote Petroleum Refinery, the Independent Petroleum Marketers Association of Nigeria (IPMAN), the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), the Major Energies Marketers Association of Nigeria (MEMAN), the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and the Nigerian Association of Road Transport Owners (NARTO).
Lokpobiri said petroleum marketers should no longer justify high pump prices based on the cost of old fuel stocks, stressing that reductions in the cost of acquiring new products must be reflected in retail prices.
He explained that although exchange rates, logistics and distribution costs remain important pricing factors, marketers must distinguish between legitimate operational costs and excessive profits arising from inventories purchased when crude oil prices were significantly higher.
According to the minister, deregulation was introduced to improve efficiency, promote healthy competition and deliver value to consumers, not to encourage arbitrary pricing or excessive profiteering.
He warned that artificially high fuel prices could undermine the government’s economic reform agenda by worsening inflation and increasing the cost of transportation, food and manufacturing.
“As new supplies are purchased at lower prices, the resulting savings should immediately translate into reduced ex-depot and retail prices,” he said.
Lokpobiri also directed the NMDPRA to strengthen market surveillance and enforce transparency to ensure that lower supply costs are passed on to consumers. He further called for the full operationalisation of the National Strategic Stock to improve energy security and help stabilise fuel prices.
Chief Executive of the NMDPRA, Rabiu Umar, acknowledged that while international crude oil prices had moderated after months of volatility caused by geopolitical tensions, domestic petrol prices had not adjusted accordingly.
He said the authority had begun engagements with industry stakeholders to address the disconnect between falling replacement costs and sustained retail prices.
“Temporary gains realised from inventories acquired at higher prices should not become the basis for sustaining elevated pump prices after replacement costs have fallen. As inventories are replenished at lower costs, the benefits should be passed on to consumers in a timely and transparent manner. That is the essence of a competitive and efficiently functioning market,” Umar said.
He added that the regulator was intensifying market surveillance, improving inventory management and accelerating the operationalisation of the National Strategic Stock to ensure consumers benefit from lower fuel costs.
Speaking on behalf of independent marketers, IPMAN National President, Abubakar Shettima, said motorists should expect further reductions in petrol prices as marketers begin purchasing products directly from the Dangote Refinery.
According to him, the arrangement will eliminate dependence on third-party depot owners, reduce acquisition costs and enable marketers to sell fuel at more competitive prices.
“At any time there is a reduction in the cost of the product, we are ready to reduce the pump price, even to below ₦800 per litre, not just ₦900,” Shettima said.
He, however, urged the Federal Government to grant independent marketers import licences to create a level playing field under the deregulated market while continuing to support local refining.
“Our major concern is a balanced distribution ecosystem. We want IPMAN members to buy directly from the Dangote Refinery, but if import licences are required, independent marketers should also be allowed to import products themselves. At the same time, government should continue to support local refining,” he added.
The government’s intervention follows the sharp decline in international crude oil prices from about $118 per barrel during the height of the Middle East tensions to around $70 per barrel after hostilities eased. Despite the decline, petrol prices in Nigeria have remained above ₦1,200 per litre, prompting concerns over whether consumers are receiving the full benefits of lower global oil prices.