The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for the development of an African fuel pricing benchmark, saying the continent should establish its own reference mechanism to support expanding refining capacity, improve price discovery and strengthen regional petroleum trade.
Speaking in Abuja on Thursday ahead of the second West Africa Refined Fuel Conference, the Authority's Chief Executive, Rabiu Umar, said Africa remains one of the few major energy-producing regions without a recognised regional pricing benchmark, despite growing investments in refining and downstream infrastructure.
Umar said regional pricing systems already exist across Europe, the Mediterranean, the Gulf region and North America, where prices are determined based on local supply, demand, logistics and transportation costs rather than relying solely on external indices.
According to him, Africa's growing refining capacity makes it increasingly necessary to establish a pricing mechanism that reflects regional market realities.
"We are also looking at Africa moving towards its own refining. The more we refine our products locally, the more important it becomes to establish our own reference pricing and create that advantage, particularly within the West African region," he said.
He noted that West Africa could develop a regional trading hub similar to the Amsterdam-Rotterdam-Antwerp (ARA) model in Europe, where petroleum products are traded and priced based on regional market fundamentals.
"The whole point of having a regional pricing benchmark is to create a hub where trading activities within a region are concentrated. Pricing depends on several factors, including logistics costs, supply and demand dynamics and transportation costs into that market," Umar explained.
The NMDPRA boss identified infrastructure as the foundation for building an integrated regional petroleum market, stressing that refining capacity alone would not guarantee efficient product distribution without adequate pipelines, storage facilities, ports and marine logistics.
"You can produce all the petroleum products you want, but if you cannot move them to the market efficiently, then you have a problem. Infrastructure is what enables products to move across the region," he said.
He pointed to the West African Gas Pipeline as an example of how cross-border infrastructure has strengthened regional energy integration by enabling gas produced in Nigeria to reach neighbouring countries, including Ghana, Togo and Benin Republic.
Umar also highlighted inadequate port capacity, shallow draft depths and limited pipeline networks as major constraints to petroleum trade across West Africa, noting that such limitations increase logistics costs and reduce market efficiency.
He further called for harmonised fuel quality specifications across African countries, arguing that differences in product standards continue to restrict cross-border petroleum trade.
According to him, efforts to standardise fuel specifications are already being pursued through the Economic Community of West African States (ECOWAS) and the Africa Refiners Association.
Responding to questions on product quality, Umar said petroleum products produced in Nigeria currently meet cleaner fuel standards than those available in several neighbouring markets.
"Nigeria does not produce products above 50 parts per million sulphur, to the best of my knowledge. Some countries in West Africa still use products with sulphur levels of up to 200 parts per million," he said.
He also credited the Dangote Petroleum Refinery with strengthening domestic fuel availability and supporting petroleum supplies to neighbouring countries despite recent disruptions in global oil markets.
According to Umar, the refinery demonstrated its strategic importance during the Strait of Hormuz tensions by helping stabilise supplies within Nigeria while also supplying petroleum products to other countries in the sub-region.
The conference, scheduled for August 11–12 in Abuja, is being organised by the NMDPRA in collaboration with S&P Global Commodity Insights and the West Africa Regulators Forum under the theme, "Funding West Africa Infrastructure & Distribution to Create a Transparent Market for Regional Price Benchmarks."
Umar said the event would focus on attracting investment into pipelines, storage terminals, marine infrastructure, logistics corridors, digital commodity exchanges, trading platforms and strategic petroleum reserves needed to support a competitive regional petroleum market.
He noted that the inaugural conference held last year had already produced measurable outcomes, including the establishment of the West Africa Regulators Forum, publication of West African reference prices, and the opening of S&P Global Commodity Insights' regional office in Abuja.
According to the regulator, this year's conference aims to deepen regional collaboration, promote transparent petroleum pricing, improve market efficiency and lay the foundation for an African benchmark capable of supporting regional trade, reducing import dependence and strengthening energy security across the continent.