Deregulation or Exploitation? FG Warns Fuel Marketers on Excessive Petrol Pricing

Deregulation or Exploitation? FG Warns Fuel Marketers on Excessive Petrol Pricing

The Federal Government has issued a stern warning to petroleum marketers against using old, expensive fuel inventory as a justification for maintaining high petrol prices, insisting that the sharp decline in global crude oil prices must be reflected at the pump for Nigerian consumers.

The directive came during a high-level stakeholders’ meeting convened by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja on Monday, bringing together major industry players including the Dangote Petroleum Refinery, regulatory agencies, and key associations such as PETROAN, IPMAN, MEMAN, DAPPMAN, and NARTO.

Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, expressed serious concern over the disconnect between falling international crude prices and domestic pump prices. He stated that while global crude fluctuated from about $61-$65 per barrel in January to over $118 in April** before falling back to around **$71, petrol prices have not adjusted downward at a similar pace. “Temporary gains realised from inventories acquired at higher prices should not become the basis for sustaining elevated pump prices after replacement costs have declined,” Lokpobiri declared. “As inventories are replenished at lower costs, the benefits of those lower costs should be transmitted to consumers in a timely and transparent manner”. The minister noted that although petrol prices have dropped from approximately ₦1,596 per litre in May to around ₦1,296 currently, the reduction remains disproportionate to the decline in global market conditions.

Lokpobiri emphasized that while Nigeria operates a fully deregulated downstream sector, this does not grant marketers a license for exploitation. He cited the Petroleum Industry Act (PIA) as empowering the regulator to prevent market distortion and “unnecessary profiteering”. “We have never faulted anybody as far as price was concerned because we are operating a fully deregulated economy. But deregulation doesn’t mean excessive profiteering,” the minister stressed. “There is no justification why the price will not reflect the current situation”. The government expressed preference for dialogue over enforcement, seeking to build consensus with industry operators on a framework for reducing prices in line with prevailing market realities rather than imposing regulatory measures.

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The minister warned that sustaining artificially high fuel prices could worsen inflationary pressures and undermine recent economic progress. Energy costs affect virtually every sector of the economy—transportation, food production, and manufacturing—directly impacting the cost of living. While Nigeria has made significant progress in moderating inflation from 34% in 2024 to 15.9%, Lokpobiri cautioned that unjustified high energy costs risk reversing these gains and slowing the recovery that Nigerians are beginning to experience. Nigeria’s petrol supply structure has shifted dramatically, with domestic refineries now supplying 87.6% of total consumption. In May 2026, total PMS supply averaged 47.4 million litres daily, with domestic refineries contributing 41.5 million litres, while imports accounted for 12.4%. Despite this, some marketers continue to import fuel, and supply chain costs, exchange rates, and logistics remain key price determinants.

NMDPRA Chief Executive Rabiu Umar confirmed that the meeting was convened at the minister’s directive to address public concerns over pricing. He noted that similar collaboration in the gas sector had already led to a reduction in LPG prices, expressing hope that the same approach would yield results in the petrol market. Umar acknowledged that despite positive signals from falling global crude prices, “the domestic retail market has not yet adjusted harmoniously to these downward shifts”. He emphasized that deregulation is designed to promote efficiency and competition, not market distortion or unfair consumer pricing. The regulator called for a transparent ecosystem where “the benefits of market improvements are passed down to the Nigerian consumer in a timely and fair manner”.

However, petroleum marketers have pushed back against allegations of profiteering, revealing that many operators are actually incurring significant financial losses. The Independent Petroleum Marketers Association of Nigeria (IPMAN) explained that recent price cuts by the Dangote Refinery have left many marketers stuck with expensive inventory purchased at higher rates. “We bought petrol at a particular rate a few days ago; on our way to our filling stations, there was a reduction. We have been struggling with the price. We have been struggling against financial losses,” said IPMAN’s National Publicity Secretary, Chinedu Ukadike. Marketers warned that any attempt to enforce price controls could trigger a nationwide shutdown of filling stations. They argue that the solution lies in increasing competition through functional refineries and boosting importation, not government price fixing. “The primary cause of this is that there is no competition. If there should be competition, the refineries will be working. That is where the minister should put his energy,” Ukadike stated.

The Dangote Refinery has already taken steps to reduce prices, slashing its gantry price by N75 per litre to N1,175 on June 16, and further reducing to N1,125 on June 25, following the de-escalation of Middle East tensions and falling crude prices. The refinery has now become one of the cheapest fuel sources in the country. Following these reductions, some filling stations in Abuja have begun adjusting pump prices, now selling between N1,205 and N1,240 per litre.

The minister directed the NMDPRA to strengthen market monitoring and enforce pricing transparency across the supply chain. He also reiterated the call for full operationalisation of the National Strategic Stock to enhance energy security, minimize supply disruptions, and help stabilize future fuel prices. As the closed-door meeting concluded, participants were expected to agree on concrete measures to ensure petrol prices align with market fundamentals while maintaining a sustainable business environment for operators.

Deregulation or Exploitation? FG Warns Fuel Marketers on Excessive Petrol Pricing