The Federal Government has challenged petroleum marketers over the continued use of previously acquired fuel inventories to justify elevated petrol prices, insisting that lower replacement costs resulting from declining global crude oil prices should be reflected in ex-depot and retail pump prices under Nigeria's deregulated downstream market.
The position was made known on Monday during a stakeholders' meeting on cost-reflective pricing of Premium Motor Spirit (PMS) convened by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja. The meeting brought together representatives of Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission (FCCPC), petroleum marketers and other key players in the downstream sector.
Speaking at the meeting, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said marketers may earn temporary gains on products purchased when crude oil prices were higher, but such inventories should not be used to sustain pump prices once replacement costs have declined. According to him, consumers are expected to benefit as marketers replenish stocks at lower acquisition costs.
Lokpobiri noted that although petrol pricing is influenced by factors such as foreign exchange rates, logistics and supply chain costs, these considerations should not prevent prices from responding to prevailing market conditions. He stressed that a competitive and deregulated downstream market requires cost savings to be passed on to consumers in a transparent and timely manner.
He said international crude oil prices had moved significantly in recent months, trading between $61 and $65 per barrelin January before climbing above $118 per barrel in April amid heightened geopolitical tensions in the Middle East. With crude prices now easing to around $71 per barrel, the minister said domestic petrol prices should more closely reflect the lower replacement cost of products.
According to him, PMS prices have declined from a peak of about ₦1,596 per litre in May to approximately ₦1,296 per litre, but the adjustment remains below what current market fundamentals would ordinarily support.
The minister warned that sustaining fuel prices above levels justified by market conditions could undermine recent progress in moderating inflation. He observed that energy costs continue to influence transportation, food prices and manufacturing expenses, noting that inflation had eased from 34 per cent in 2024 to 15.9 per cent, and urged stakeholders to avoid actions that could reverse the trend.
Reaffirming the Federal Government's commitment to downstream deregulation, Lokpobiri said the policy was designed to deepen competition, improve efficiency and protect consumers. He directed the NMDPRA to strengthen market monitoring and promote greater pricing transparency to ensure reductions in underlying costs are reflected throughout the supply chain.
The minister also called for the accelerated operationalisation of the National Strategic Stock, describing it as a critical tool for improving energy security, reducing exposure to supply disruptions and mitigating future price volatility.
Earlier, the Chief Executive of the NMDPRA, Rabiu Umar, said the engagement was convened at the minister's directive to address concerns over the disconnect between declining global crude oil prices and domestic petrol pricing. He recalled that a similar engagement with stakeholders in the domestic gas market had contributed to lower liquefied petroleum gas prices and expressed optimism that constructive dialogue could produce similar outcomes for PMS.
Umar added that deregulation should promote efficiency and fair pricing rather than market distortions, noting that regulators and industry operators must work together to ensure that improvements in market conditions translate into measurable benefits for consumers while preserving the sustainability of investments across the downstream sector. He said discussions with stakeholders were expected to continue with the aim of reaching a common position.