The Nigerian Government is set to embark on the full deregulation of the downstream sector of the petroleum industry, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Federal Competition and Consumer Protection Commission (FCCPC) have affirmed their commitment to safeguarding the interests of consumers against exploitation and anti-competitive practices by oil marketers. This move is aimed at preventing any potential price-fixing of Premium Motor Spirit (PMS).
During a virtual workshop titled “Deregulation of the Nigerian downstream sector: The day after” organized by the Nigerian Petroleum Downstream Industry in collaboration with the African Refiners and Distributors Association in Lagos, the NMDPRA and FCCPC made their stance known.
Farouk Ahmed, Chief Executive of the NMDPRA, stated that the Authority is dedicated to establishing an effective post-market monitoring and evaluation system that ensures prices of petroleum products, including petrol, are a true reflection of the market forces.
He added that the Authority would identify market risks, such as the possibility of price increases, reduced competition, or decreased quality of service, and review the regulatory framework to ensure that the post-subsidy market remains fair to all customers and competitive to all operators.
Francis Ogaree, ED of Hydrocarbon Processing Plants, Installations and Transportation Infrastructure, NMDPRA, reiterated that Part IV sections 31 and 32 of the Petroleum Industry Act(PIA) 2021 empower the Authority to enforce a pricing framework and benchmark for every petroleum product.
While the Authority will not be responsible for determining the prices of the products, Ogaree stated that it would be committed to the application of the pricing formula to protect customers. He further emphasized the need for operators to comply with the regulations, warning that penalties would be enforced on defaulters where necessary.
Mrs. Morayo Adisa, Technical Consultant to the Executive Vice Chairman/CEO of FCCPC, in her presentation, disclosed that price gouging by marketers during post-deregulation would be measured against what is considered reasonable and fair pricing. She stated that the FCCPC, by Section 17(s) of the Federal Competition and Consumer Protection Act (FCCPA) 2018, classifies price gouging as an unscrupulous exploitation of consumers by companies, firms, trade associations, or individuals.
Adisa revealed that the government could implement measures to regulate the prices of products and services in the downstream sector, such as setting maximum retail prices or implementing price stabilization mechanisms. She emphasized that protecting consumers’ interests in the downstream sector requires a collaborative effort from the government, industry stakeholders, and consumers themselves.