Petroleum marketers have rejected government-imposed N1,350 price caps on petrol, insisting that market forces, competition and improved distribution efficiency should determine prices in Nigeria’s deregulated downstream sector.
The Major Energies Marketers Association of Nigeria said arbitrary price caps would not address the underlying challenges in the petroleum market, advocating transparent pricing mechanisms and measures to tackle supply bottlenecks and reduce operating costs.
According to a summary of MEMAN’s third-quarter press engagement held virtually on Thursday in partnership with S&P Global Energy, the association maintained that “government arbitrary price caps are not the solution to petroleum market challenges”.
It added, “Rather than distorting market prices, the focus should be on transparent, market-driven pricing, efficient distribution and measures that address supply bottlenecks and reduce operating costs.”
The position comes a week after the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced that the Federal Government was negotiating a N1,350-per-litre ceiling on petrol’s ex-gantry or landing cost, under which refiners and importers would initially absorb costs above the ceiling and recover the shortfall later when market conditions improved.
Oyedele said the proposed arrangement, which would be reviewed monthly, was designed to moderate price fluctuations rather than reintroduce the petrol subsidy removed in May 2023.
“We are introducing price modulation. The government is negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol to keep the price stable.
“When costs rise above the ceiling, refineries and importers will carry the shortfall and recover it later. This is neither a subsidy nor price control,” the minister said.
The government’s proposal followed rising petrol prices linked to international oil market disruptions and renewed pressure on households and businesses. It also announced a 30-day petrol discount at Nigerian National Petroleum Company Limited filling stations, with priority for public transport operators, as part of measures to cushion the impact of higher fuel costs.
MEMAN also called for clearer bulk supply arrangements covering product access, pricing, delivery schedules and contractual obligations, as well as improved inventory visibility, storage capacity, transport coordination and contingency planning.
The association said a well-structured market should enable competition, improve supply security and support better outcomes for consumers without relying on government-imposed price controls or broad-based fuel subsidies.
On regulation, MEMAN commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority for its progress in promoting product quality, digitalising licensing, publishing useful market data and advancing measures to foster fair competition.
It further advocated non-discriminatory access to petroleum products and efficient regulatory processes, stressing the need to uphold quality standards, ensure accurate measurement and deliver the quantities customers pay for.
The engagement also examined developments in global and West African refined petroleum markets, including the need for credible regional pricing benchmarks.
S&P Global Energy highlighted how geopolitical tensions, refining disruptions and changing global supply dynamics had contributed to price volatility, particularly in middle distillates such as diesel and aviation fuel.
The presentations identified the Free on Board West Africa and STS Lomé assessments as reference points for domestically supplied and imported refined products, respectively. Greater transparency, reliable market data and wider industry adoption were described as necessary to establish a credible West African reference market.
MEMAN maintained that a sustainable petroleum market required predictable pricing arrangements, efficient supply chains and fair competition, rather than government-imposed price controls.
It added that a properly structured market should promote competition, strengthen supply security and deliver better outcomes for consumers without relying on government-imposed price controls or broad-based fuel subsidies.
The debate over the N1,350-per-litre ceiling has highlighted the tension between efforts to protect consumers from rising fuel costs and the need to maintain a commercially viable petroleum supply chain.
While a price ceiling is intended to limit how much suppliers can charge at a specified point in the distribution chain, its effect depends on the level at which it is imposed, prevailing supply costs and whether market participants can recover their operating expenses.
MEMAN’s position suggests that controlling prices without addressing the underlying costs of sourcing, transporting, storing and distributing petroleum products could leave structural market problems unresolved.
The association instead called for clearer bulk supply arrangements, predictable pricing mechanisms and improved coordination between domestic refiners and importers.
The group also said Nigeria should prioritise output from domestic refineries while allowing imports to bridge supply gaps and address disruptions.