Petroleum marketers have warned that the Federal Government’s proposed ₦1,350-per-litre ceiling on petrol costs could distort market prices, urging the government to allow competition and market forces to determine prices in Nigeria’s deregulated downstream petroleum sector.
The Major Energies Marketers Association of Nigeria (MEMAN) said arbitrary price caps would not address the structural challenges affecting the petroleum market, calling instead for transparent pricing mechanisms, improved distribution efficiency and measures to reduce operating costs.
The position was contained in 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 that the focus should be on “transparent, market-driven pricing, efficient distribution and measures that address supply bottlenecks and reduce operating costs.”
The warning comes a week after the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced that the Federal Government was negotiating a ₦1,350-per-litre ceiling on petrol’s ex-gantry or landing cost.
Under the proposed arrangement, refiners and importers would initially absorb costs exceeding the ceiling and recover the shortfall later when market conditions improve.
Oyedele said the arrangement, which would be reviewed monthly, was designed to moderate petrol price fluctuations without reinstating the subsidy removed in May 2023.
“We are introducing price modulation. The government is negotiating a ceiling of ₦1,350 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.
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The proposal followed rising petrol prices attributed to disruptions in the international energy market, which has caused a significant jump on crude oil prices in the past eight months, intensifying pressure on households and businesses.
As part of efforts to cushion the impact, the Federal Government also announced a 30-day petrol discount at Nigerian National Petroleum Company Limited filling stations, with priority for public transport operators.
However, MEMAN’s position highlights concerns about whether limiting costs at a specified point in the supply chain could create additional pressures for refiners, importers and other market participants if underlying supply and distribution costs remain high.
The association called for clearer bulk supply arrangements covering product access, pricing, delivery schedules and contractual obligations.
It also advocated improved inventory visibility, expanded storage capacity, better transport coordination and stronger contingency planning to strengthen supply security.
According to MEMAN, a properly structured petroleum market should promote competition, improve product availability and deliver better outcomes for consumers without depending on government-imposed price controls or broad-based fuel subsidies.
The association further urged the government to prioritise boosting output from domestic refineries while allowing imports to bridge supply gaps and respond to disruptions.
On regulation, MEMAN commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for progress in promoting product quality, digitalising licensing, publishing market data and advancing measures to encourage fair competition.
It also called for non-discriminatory access to petroleum products and more efficient regulatory processes, stressing the importance of maintaining quality standards, ensuring accurate measurement and delivering the quantities customers pay for.
The engagement also examined developments in global and West African refined petroleum markets, including the need to establish 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.
Participants stressed that greater transparency, reliable market data and wider industry adoption would be necessary to establish a credible West African reference market.
The debate over the proposed petrol ceiling underscores the challenge facing the Federal Government as it seeks to protect consumers from rising fuel costs while maintaining a commercially viable petroleum supply chain.
Although a ceiling could help moderate price fluctuations, its effectiveness would depend on the level at which it is imposed, prevailing supply costs and whether refiners and importers can recover their expenses under the proposed arrangement.
MEMAN’s position suggests that limiting prices without addressing the costs of sourcing, transporting, storing and distributing petroleum products could leave underlying market challenges unresolved.
The association therefore advocated predictable pricing arrangements, efficient supply chains and stronger coordination between domestic refiners and importers as the basis for a more competitive and sustainable downstream petroleum market.
Victor Ezeja is a Nigerian journalist skilled in producing insightful news analyses, feature stories, and interviews that simplify complex issues and drive informed public discourse. His work combines rigorous research, balanced reporting, and compelling storytelling to highlight developments shaping industries and society. Victor, who holds a Master's Degree in Mass Communication, specializes in energy, aviation, business, and economic reporting. He can be reached via @VICTOREZEJA on X