What determines fuel pump price – NMDPRA

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said petrol pump prices are determined by market forces and are not fixed by the regulator under the Petroleum Industry Act 2021.

The authority made this known in a statement on Saturday while responding to concerns over the recent increase in the retail prices of Premium Motor Spirit, popularly known as petrol, across the country.

The NMDPRA acknowledged the financial pressure caused by the latest increase in fuel prices, noting that the situation was affecting households, transport workers and businesses.

However, the regulator said its role under the PIA was not to impose pump prices on petroleum marketers but to ensure that operators complied with applicable laws and that consumers were protected from anti-competitive and exploitative practices.

Market-based pricing under PIA

According to the authority, Section 205(1) of the Petroleum Industry Act provides that wholesale and retail prices of petroleum products should be based on unrestricted free-market pricing conditions.

It explained that the provision meant that NMDPRA neither fixed petrol prices nor issued administrative price templates for petroleum products.

“Pursuant to the PIA 2021, Section 205(1) provides that wholesale and retail prices of petroleum products shall be based on unrestricted free market pricing conditions,” the authority said.

NMDPRA further explained that Sections 205(2) to 205(4) limited government intervention in petroleum pricing to exceptional situations where there was formal evidence of a declared market failure.

It said no such market failure had been declared, adding that Section 216 of the PIA empowered the authority to prevent anti-competitive practices, price-fixing and abuse of market dominance.

The clarification comes amid growing concerns among consumers and businesses over the impact of rising petrol prices on transportation costs, household expenses and operating costs.

Regulator steps up surveillance

While stressing that deregulation did not remove regulatory obligations, NMDPRA said it was taking measures to safeguard the petroleum market and maintain supply stability.

The authority said it was conducting joint security operations with the Nigeria Customs Service and other relevant security agencies to strengthen surveillance along border corridors.

According to NMDPRA, the operations were designed to curb the illegal diversion of petroleum products across Nigeria’s borders and support stability in domestic fuel supply.

The regulator also said petroleum operators remained subject to regulatory compliance and fair-trade standards despite the deregulated nature of the downstream petroleum market.

Under its Memorandum of Understanding with the Federal Competition and Consumer Protection Commission, NMDPRA said both agencies maintained joint surveillance of the market.

The surveillance is intended to identify practices such as price-gouging, collusion, under-dispensing of petroleum products and the sale of products whose quality has been compromised.

NMDPRA said it was also establishing dedicated feedback and reporting channels through which members of the public and industry stakeholders could report suspected irregular pricing and exploitative trade practices.

It said complaints received through the channels would be subjected to regulatory investigation, with enforcement action taken where necessary.

The authority reaffirmed its commitment to carrying out its statutory responsibilities under the Petroleum Industry Act, saying its focus remained on ensuring energy security, promoting fair competition and protecting consumers within the existing legal framework.