NMDPRA Unveils Sweeping Draft Rules to Ban Fuel Price-Fixing, Artificial Scarcity

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has proposed comprehensive new regulations aimed at eliminating anti-competitive practices, including fuel price-fixing, market allocation, bid-rigging, and artificial scarcity, across the country’s midstream and downstream petroleum industry. The draft framework, released for public consultation on August 6, 2026, comes amid growing concerns over coordinated pricing among major fuel importers and follows allegations that some operators were selling imported Premium Motor Spirit at prices significantly above locally refined alternatives from the Dangote Petroleum Refinery.

The proposed Midstream and Downstream Petroleum Prevention of Anti-Competitive Practices and Behaviour Regulations, 2026, if adopted, would prohibit petroleum companies from entering into any formal or informal agreements that prevent, restrict, or distort competition. The NMDPRA, in a public notice issued on Thursday, invited licensees, permit holders, and other stakeholders to submit comments on the draft regulations within 21 days, in compliance with Section 216(1) of the Petroleum Industry Act (PIA) 2021, which requires stakeholder consultation before regulations are finalised. The notice, signed by the Authority’s Chief Executive, Rabiu A. Umar, directed industry participants to review the draft on the NMDPRA website and submit observations through the prescribed format. A stakeholders’ consultation forum has been scheduled for September 22, 2026, at the Authority’s headquarters in Abuja, where industry players, civil society organisations, and consumer groups will have the opportunity to provide direct input on the proposed framework.

The draft regulations target a wide range of coordinated conduct that could harm competition and disadvantage consumers. Under Part IV, titled “Collusive Agreements and Anti-Competitive Coordination,” the framework states that “No licensee, market participant, or group of undertakings in the midstream or downstream petroleum sector shall enter into any agreement, arrangement, understanding, or concerted practice, whether formal or informal, written or oral, explicit or tacit, that has the object or effect of preventing, restricting, or distorting competition.” The regulations specifically identify price-fixing or coordinated pricing behaviour as prohibited, including agreements on pump prices, ex-depot prices, margins, discounts, surcharges, freight charges, and pricing benchmarks. If approved, petroleum companies would no longer be permitted to jointly set commercial terms that influence retail fuel prices, a practice that has historically kept pump prices artificially high even when global crude prices decline.

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The proposed framework also seeks to outlaw market allocation arrangements, where competitors divide customers, geographical territories, product lines, or supply areas among themselves instead of competing openly for market share. Additionally, the regulations would prohibit bid-rigging and collusive tendering in procurement processes, as well as collective supply restrictions where companies jointly reduce production, imports, throughput, or product supply to create artificial scarcity or manipulate market conditions. Such practices have been a longstanding concern in Nigeria’s petroleum sector, where consumers have frequently faced fuel queues and sudden price hikes that appear disconnected from global market trends. The NMDPRA is also targeting tacit collusion and price signalling, including the use of public statements, trade association meetings, or indirect communications to influence competitors’ pricing decisions or exchange commercially sensitive information such as future pricing plans, production schedules, customer lists, and bidding strategies.

Beyond pricing and supply coordination, the regulations aim to prevent restrictive commercial arrangements that could limit market access for smaller operators and independent marketers. The draft proposes restrictions on exclusive supply agreements, excessively long-term contracts, and take-or-pay obligations that effectively lock buyers into a single supplier, thereby reducing their ability to source fuel from more competitive alternatives. The Authority also plans to scrutinise tying and bundling arrangements, where companies with significant market power require dealers or buyers to purchase unrelated products or services as a condition for accessing fuel supply or infrastructure services. These practices, according to the draft regulations, could stifle the growth of independent marketers and reduce consumer choice in the downstream market.

To strengthen enforcement, the regulations empower the NMDPRA to monitor press releases, investor calls, trade association meetings, and public statements by dominant market players for possible anti-competitive coordination. The Authority would also be authorised to investigate suspected anti-competitive practices and work alongside the Federal Competition and Consumer Protection Commission (FCCPC) on competition-related matters, ensuring a coordinated regulatory approach across Nigeria’s economic sectors. Under the proposed framework, companies found guilty of serious anti-competitive practices could face administrative fines of up to five per cent of their annual turnover from regulated petroleum activities in Nigeria, while persistent offenders risk suspension or revocation of their licences. Directors or managers directly involved in serious violations could face personal liability, management disqualification, or prosecution where applicable, signalling a tough stance on corporate misconduct.

The regulatory push comes amid renewed scrutiny of Nigeria’s downstream petroleum market following concerning developments in petrol pricing dynamics after the entry of the Dangote Petroleum Refinery. In July 2026, independent petroleum marketers accused major fuel importers, including AA Rano and Matrix, of selling imported petrol at coordinated prices around N1,350 per litre, significantly above what Dangote had been offering to marketers. The Independent Petroleum Marketers Association of Nigeria (IPMAN) argued that such practices defeated the purpose of import licences meant to encourage competition and moderate prices for Nigerian consumers. The allegations remain contested, and no regulatory finding of collusion has been published, but the incident has heightened public and official concern about the effectiveness of deregulation in delivering price benefits to consumers.

Official price data illustrate the pressure on regulators and the urgency of the proposed rules. National Bureau of Statistics figures show the average pump price surged from N1,034.76 per litre in January 2026 to N1,596.25 in May 2026, representing a 55.31 per cent rise over the same period in 2025. The NMDPRA has confirmed that the Dangote Petroleum Refinery accounted for 87.55 per cent of petrol supplied to the domestic market in May 2026, highlighting significant market concentration that could potentially enable dominant players to influence prices and supply conditions. The proposed regulations form part of broader reforms introduced under the Petroleum Industry Act 2021, which expanded the role of regulators in promoting efficiency, transparency, and fair competition across Nigeria’s petroleum value chain, moving away from the opaque and subsidy-dependent system that characterised the sector for decades.

If adopted after stakeholder consultations, the new rules will provide the NMDPRA with a dedicated legal framework to investigate and sanction anti-competitive conduct while supporting a more transparent, competitive, and consumer-focused petroleum market. The regulations would also strengthen Nigeria’s position in the regional energy market by fostering a more predictable and investment-friendly environment for domestic and foreign investors. The Authority has also signalled interest in improving price transparency across the region, saying it is exploring pathways for establishing an African petroleum products reference price benchmark that reflects regional market realities and protects consumers from arbitrary pricing. Stakeholders have until August 27, 2026, to submit their comments, and the September 22 consultation forum is expected to generate robust debate on how best to balance competition, investment, and consumer protection in Nigeria’s evolving petroleum sector.