Marketers decline petrol price reduction as crude cost drops $70/b

Global crude oil prices have declined to the $70 per barrel mark, raising fresh expectations among Nigerians on the need for drop in petrol price.

The downward slide in crude prices continued on Thursday morning as the benchmark Brent crude slipped to $70 from $71 per barrel it closed on Wednesday.

However, despite the significant drop in international oil prices, the pump price of Premium Motor Spirit (PMS) otherwise known as petrol has remained unchanged in Nigeria despite pressure from Nigerians.

The decline in crude prices comes amid concerns over slowing global demand, easing geopolitical tensions in some oil-producing regions and expectations of increased supply from major producers.

Brent crude, the international benchmark, has retreated from higher levels recorded earlier in the year to around $70 per barrel.

With the deregulation of the downstream petroleum market, movements in global crude prices are expected to influence the cost of refined petroleum products.

This has prompted consumers to question why local pump prices have yet to reflect the latest decline in the international market weeks after.

The federal government through the Ministry of Petroleum and the Federal Competition and Consumer Protection Commission (FCCPC) had called for reduction in pump prices in response to the drastic drop in crude prices.

The Executive Vice Chairman and Chief Executive Officer of the Commission, Mr. Tunji Bello, clarified that the FCCPC does not regulate or approve petroleum prices in Nigeria’s deregulated downstream sector.

“To be clear, the Commission does not regulate or approve petroleum prices in a deregulated downstream market. Our responsibility under the Federal Competition and Consumer Protection Act, 2018, is to promote competitive markets, prevent anti-competitive conduct, and protect consumers from unfair, deceptive and exploitative business practices,” Bello said.

He added that while petroleum marketers often increase pump prices almost immediately whenever global crude oil prices rise, consumers are yet to enjoy corresponding reductions despite the recent decline in crude prices.

“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is curious that it is taking forever for consumers to benefit significantly when crude prices fall. Competitive markets must work fairly in both directions,” he stated.

However there has been a pushback from marketers over the threat of sanctions even as the marketers threaten to embark on strike.

Even as the crude price slipped to $71 as of yesterday, a litre of PMS is still sold at over N1,200 in Lagos and almost N1,300 in the other parts of the country.

A source within the major marketers’ group in a chat with our correspondent however insisted that the gantry price is still above N1,000 per litre.

“For you to say we marketers should reduce our prices, the gantry price must first of all come down. so we need to start from there first and foremost,” he said.

Stakeholders express mixed reactions over price control threat

Meanwhile, stakeholders in the country’s economy have expressed divergent views over the threat by the federal government to wield the big stick on fuel marketers making undue profit from the declining global oil prices.

Prof. Wumi Iledare, Professor Emeritus of Petroleum Economics, faulted the threat and expressed that executive fuel price fixing will undermine the very purpose of the Petroleum Industry Act, PIA.

He hinted that a rules-based downstream petroleum market cannot simultaneously operate under deregulation and executive price directives for obvious reasons.

The rule of law and the sanctity of the PIA, he maintained, must be religiously preserved in the industry.

He noted that fuel prices rise quickly when crude rises, but fall slowly when crude falls — what economists call “asymmetrical price transmission.”

He added: “Crude up, prices take the elevator. Crude down, prices take the staircase. Immediate cuts are neither automatic nor economically inevitable.”

The Chief Executive Officer of Centre for Promotion of Private Enterprise, Dr. Muda Yusuf, told Daily Trust that the Federal Government should exercise utmost restraint in resolving local pricing of fuel following the ongoing drop in global crude oil price.

He said the issue is a double edge sword: public interest and the profit angle on the part of the marketers which is geared towards sustaining them in the fuel marketing business.

He hinted that any price control moves by the Federal Government must be tactful and evidence-based so as to avoid wielding the big sticks unduly on fuel marketers in the country.

Rasheed Adeleke, an energy expert told Daily Trust that the agency’s planned action is in order and do not constitute any danger to the country’s business environment.

He maintained that it’s within the regulatory powers of the NMDPA to wield big sticks on institutions whose actions will endanger Nigerians against international best practices.

He added: “Marketers are not lords and shouldn’t be treated as such in a country with robust petroleum laws. They can’t continue to cheat Nigerians or make life more unbearable for the citizens while the agencies look helpless and hapless.”

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