Now that the conflict between Iran and the United States has come to an end, the Federal Government is expecting fuel marketers to begin adjusting pump prices following the reopening of the Strait of Hormuz, a key global oil shipping route through which about one-fifth of the world’s crude oil is transported.
With global crude oil prices having fallen in the wake of the ceasefire and the reopening of the strategic shipping route, the government has expressed concern over marketers’ failure to significantly reduce petrol pump prices, warning that operators in the downstream petroleum sector must not exploit Nigerian consumers under the guise of market liberalisation.
The apex government, through the Federal Competition and Consumer Protection Commission (FCCPC), said findings from its ongoing surveillance of the downstream petroleum industry indicate that reductions in petrol prices by local refiners, depot operators, marketers, and retail outlets have been minimal and do not reflect the steep fall in international crude oil prices.
It stated that the situation raises serious concerns about possible consumer exploitation and anti-competitive practices.
The government’s position on Sunday comes amid growing public concern over the continued high cost of petrol despite improving conditions in the international oil market, with many consumers expecting lower pump prices to ease transportation costs and overall inflationary pressures.
The Vice Chairman and Chief Executive Officer of the FCCPC, Tunji Bello, said while the Commission does not regulate fuel prices in Nigeria’s deregulated downstream petroleum sector, it has a statutory responsibility to ensure markets remain competitive and consumers are protected from unfair business practices.
“To be clear, the Commission does not regulate or approve petroleum prices in a deregulated downstream market,” Bello said.
“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.”
According to him, the Commission is particularly worried by what it described as the slow transmission of lower crude oil prices to Nigerian consumers.
“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.
Global crude oil prices have declined sharply following the ceasefire agreement between the United States and Iran and the reopening of the Strait of Hormuz, a key shipping route for global oil exports.
Crude prices, which surged to about $120 per barrel at the height of tensions in April, have since dropped to around $73 per barrel, returning to levels recorded in February.
The earlier spike had prompted marketers and refiners to increase petrol pump prices across Nigeria, with Premium Motor Spirit (PMS) selling for between N1,350 and N1,500 per litre in many locations, while diesel rose to about N2,000 per litre.
Before the surge in global oil prices, petrol was sold to motorists for between N800 and N900 per litre in February.
Despite the significant decline in crude prices, petrol is still selling for an average of about N1,200 per litre nationwide, while some local refiners continue to maintain gantry prices ranging between N1,025 and N1,075 per litre.
Although the FCCPC acknowledged that domestic fuel prices are influenced by several commercial factors, including refining costs, foreign exchange fluctuations, logistics, financing and distribution expenses, it maintained that competitive market forces should have resulted in more meaningful reductions in pump prices.
Bello warned that market liberalisation does not exempt businesses from complying with competition and consumer protection laws.
“Market liberalisation does not diminish businesses’ obligations to compete fairly or consumers’ right to fair treatment. Where credible evidence indicates conduct that undermines competition, exploits consumers or otherwise contravenes the Federal Competition and Consumer Protection Act, the Commission will investigate and take appropriate enforcement action,” he said.
The Commission urged Nigerians to report suspected cases of price manipulation, anti-competitive practices and other unfair market conduct through its established complaint channels.