Cost of stock of fuel purchased during the face-off between the United States and Iran should not be the determinant of fuel prices in the Nigerian market.

This is the position of the Nigerian government, who also cautioned petroleum marketers against using the cost of old stock as a benchmark for selling prices, insisting that the benefits of lower replacement costs must reflect on what consumers are paying.

According to the government, the continued disconnect between falling international crude oil prices and domestic petrol prices had become a source of concern. She therefore cautioned petroleum marketers against sustaining high pump prices of fuels, particularly the Premium Motor Spirit (PMS), despite declining global crude prices as doing so would deny Nigerians the benefits of lower replacement costs in a deregulated market.

The concerns were expressed at a stakeholders’ meeting on cost-reflective pricing of PMS held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Monday in Abuja.

ALSO READ: Dangote Cement Unveils Sustainability Milestones

It was gathered that the government convened a stakeholders’ meeting on the fair and cost-reflective pricing of PMS, which brought together representatives of the Dangote Petroleum Refinery & Petrochemicals (DPRP), the Federal Competition and Consumer Protection Commission (FCCPC), the Petroleum Products Retail Outlets Owners Association of Nigeria (PEPROOAN), and other key players in the downstream petroleum sector.

In attendance were chief executives and representatives of TotalEnergies, Eterna Plc, Matrix Energy Group, the Depot and Petroleum Products Retailers Association of Nigeria (DPPRAN), the Major Energy Marketers Association of Nigeria MEMAN), the Independent Petroleum Marketers Association of Nigeria (IPMAN), the Nigerian Association of Road Transport Owners (NARTO), as well as officials of the NMDPRA.

During the meeting, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said temporary gains realised 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.

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 realised 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 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.

According to the minister, international crude prices traded between $61 and $65 per barrel in January before surging above $118 per barrel in April following heightened geopolitical tensions in the Middle East. However, prices have since declined to around $71 per barrel after the easing of the tensions.

He noted that while the earlier rise in crude prices exerted upward pressure on petrol prices, the subsequent decline had not been reflected proportionately in domestic pump prices.

“Ordinarily, such movements in crude oil prices should be reflected in the pricing of refined petroleum products. While the initial increase in crude prices understandably exerted upward pressure on PMS prices, the subsequent moderation in crude oil prices has not translated into a commensurate reduction in pump prices across the domestic market.

“This disconnect has understandably raised concerns. PMS peaked at about N1,596 per litre in May and currently sells at around N1,296 per litre. While there has been some reduction, the adjustment has not been commensurate with the decline in underlying market conditions,” the minister said.

The minister warned that keeping energy prices artificially high could worsen inflationary pressures and undermine the economic gains achieved by the government over the past year.

He said energy remained a critical input across virtually every segment of the economy and that unjustified high fuel prices translated into higher transportation costs, food prices and production expenses.

“When the cost of energy remains elevated beyond what prevailing market conditions justify, the results translate to inflation. While considerable progress has been made in moderating inflation from the highs experienced in 2024, when inflation stood at 34 per cent, the latest figures show that inflation currently stands at 15.9 per cent.

“Sustaining high energy costs where underlying market fundamentals have improved risks undermining these gains and slowing down the recovery that Nigerians are beginning to experience,” he added.

The minister, however, commended the economic reforms of President Bola Tinubu, saying the removal of fuel subsidy, the crude-for-naira initiative and other executive interventions had laid the foundation for a more competitive and investment-driven downstream petroleum industry.

He said, “The Federal Government remains unwavering in its commitment to protect public interest post-deregulation. Deregulation was never intended to create opportunities for excessive pricing or market distortions but rather to promote efficiency, deepen competition and ultimately deliver value to Nigerians.”

Lokpobiri consequently directed the NMDPRA to intensify market surveillance and enforce pricing transparency across the downstream value chain.

“I urge the Authority to strengthen market surveillance and enforce pricing transparency across the supply chain to ensure that reductions in underlying costs are reflected promptly in ex-depot and retail prices. Consumers should have confidence that prices are determined fairly and not by information asymmetry or anti-competitive practices.”

He also called for the speedy operationalisation of the National Strategic Stock, describing it as a critical instrument for safeguarding national energy security and moderating future price shocks.

“The National Strategic Stock will strengthen national energy security, reduce exposure to supply disruptions and moderate price volatility. There is urgency in ensuring that this mechanism becomes fully operational,” he said.

Earlier in his opening remarks, the Authority Chief Executive of the NMDPRA, Rabiu Umar, said the meeting was convened at the directive of the minister to address the growing concerns surrounding petrol pricing and ensure that Nigerians benefit from improvements in global market conditions.

Umar recalled that a similar engagement with operators in the domestic gas sector had recently resulted in a noticeable reduction in liquefied petroleum gas prices, expressing optimism that the same collaborative approach could deliver results in the petrol market.

“Just two weeks ago, many of us gathered in a similar forum to discuss the domestic gas sector. The candid dialogue and the actionable wins we secured during that session are already bearing fruit. Notably, we have seen LPG prices coming down significantly across the market, and we look forward to seeing even more reduction within the next two weeks.

“It is exactly this kind of tangible success that inspired today’s gathering. When regulators and industry operators sit at the same table, we do not just debate challenges, we engineer solutions,” he said.

The NMDPRA boss acknowledged that global crude prices had moderated significantly in recent weeks but lamented that the domestic retail market had yet to adjust accordingly.

“As a responsible regulatory authority, it is our duty to step in alongside you, our valued partners, to interrogate the market forces, understand the operational bottlenecks and directly address this disconnect between falling replacement costs and sustained retail prices.

“Deregulation is not a licence for market distortion or unfair consumer pricing. It is intended to drive efficiency, maximise value and protect the public interest.

“Sustainable profitability for marketers and consumer welfare are not mutually exclusive. We need to build a transparent ecosystem where the benefits of market improvements are passed down to the Nigerian consumer in a timely and fair manner,” Umar added.

He stressed that the objective of the meeting was not to dictate prices but to collaborate with industry stakeholders on practical solutions that would keep businesses viable while protecting consumers.