The federal government has warned petroleum marketers against using profits from previously acquired expensive fuel inventories as justification for maintaining high petrol prices, insisting that the benefits of lower replacement costs must be passed on to consumers.
The government said the continued disconnect between falling international crude oil prices and domestic petrol prices had become a source of concern, warning petroleum marketers against sustaining high pump prices of Premium Motor Spirit despite declining global crude prices and insisting that Nigerians should enjoy the benefits of lower replacement costs in a deregulated market.
The warning was issued during a stakeholders’ meeting on cost-reflective pricing of PMS held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority on Monday in Abuja.
PUNCH Online reports that the Federal Government convened a stakeholders’ meeting on the fair and cost-reflective pricing of premium motor spirit, bringing together representatives of the Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission, the Petroleum Products Retail Outlets Owners Association of Nigeria, and other key players in the downstream petroleum sector.
The meeting was attended by chief executives and representatives of TotalEnergies, Eterna Plc, Matrix Energy Group, the Depot and Petroleum Products Retailers Association of Nigeria, the Major Energy Marketers Association of Nigeria, the Depot and Petroleum Products Marketers Association of Nigeria, the Independent Petroleum Marketers Association of Nigeria, and the Nigerian Association of Road Transport Owners, as well as officials of the NMDPRA.
Speaking at the event, the minister of state for petroleum resources (oil), Senator Heineken Lokpobiri, said temporary gains realized from inventories purchased when crude oil prices were higher should not become the basis for sustaining elevated pump prices after global oil prices have declined.
According to the minister, as marketers replenish their stocks at lower costs, reductions in procurement expenses should be reflected promptly in ex-depot and retail petrol prices in line with the principles of a competitive and efficient deregulated market.
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Lokpobiri said the government understood that petrol pricing was influenced by several factors beyond crude prices, including exchange rates, logistics, and supply chain costs, but insisted that marketers must distinguish between legitimate replacement costs and extraordinary gains arising from inventory management.
“I am aware that PMS pricing is influenced by several factors beyond crude oil prices, but it is equally important to distinguish between genuine replacement cost and windfall gains arising from inventory management.
“Temporary gains realized from inventories acquired at higher prices should not become the basis for sustaining elevated pump prices after replacement costs have declined. As inventories are replenished at lower costs, the benefits of those lower costs should be transmitted to consumers in a timely and transparent manner. That is the essence of a competitive and efficiently functioning market,” he stated.
The minister added that the federal government remained committed to protecting consumers in the post-subsidy era, stressing that deregulation was not designed to create opportunities for excessive pricing or market distortions but to deepen competition, improve efficiency, and deliver value to Nigerians.
He further warned that sustaining high energy costs beyond what prevailing market conditions justify could worsen inflationary pressures and undermine the gains recorded in moderating the country’s inflation rate.
The minister urged petroleum marketers and operators to immediately transmit the benefits of falling global crude oil prices to Nigerian consumers, warning that deregulation should not be exploited to sustain high petrol prices and generate windfall gains.
His comments come amid growing public concerns over the slow pace of reductions in petrol prices despite the sharp moderation in crude oil prices in recent months.
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