NMDPRA blames fluctuation in petrol price on logistics costs and single-source refining

The Nigerian Midstream and Downstream Petroleum Regulatory Authority has attributed fluctuations in petrol pump prices to crude oil sourcing, dependence on a single source of domestic refining, logistics and transportation costs under the deregulated market. NMDPRA Head of Public Affairs George Ene-Ita disclosed this in an interview on Sunday, September 6. Ene-Ita said petrol pricing had been fully deregulated, meaning changes throughout the supply chain, including crude procurement, refinery delivery timelines, imported cargoes, transportation and taxes, are reflected in pump prices. He added that marine and inland taxes associated with the movement and supply of petroleum products also form part of the pricing structure. “This issue is knotty in the sense that there are various factors involved,” Ene-Ita said. “Pump price petrol has been completely deregulated. And if this is the case, it also means that all volatilities associated with supply have to be factored in. “These factors include single source domestic refining, sourcing of crude oil as feedstock, time lag between when crude is sourced offshore and when it eventually arrives the refinery. “They also include time lag between when PMS cargoes are ordered and when they eventually arrive our ports for subsequent inland distribution and supply in the case of imported fuel.” Ene-Ita said transportation and landing costs, along with marine and inland taxes, also contribute to petrol prices. “Perhaps when the domestic refining ecosystem becomes more robust, competitive and sustainable, the issues regarding pricing will become clearer and more beneficial to consumers,” he said. The NMDPRA spokesperson said refinery pricing templates and ex-depot prices are not regulated under the current framework. He, however, said the authority was working with industry stakeholders and agencies, including the Federal Competition and Consumer Protection Commission, to promote price equilibrium and parity at the last mile. President of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi Garima, meanwhile, called on the Federal Government to intervene in the pricing of crude oil supplied to domestic refineries to moderate fuel prices and reduce pressure on consumers. Maigandi said fluctuations in the international crude oil market were affecting domestic petrol prices because refiners purchase crude at prevailing market rates. According to him, higher crude prices increase production costs for refiners, with the additional costs subsequently passed on to the market. He called for government intervention to lower the cost of crude supplied to domestic refineries during periods of significant international price volatility. Maigandi argued that such a measure should not be regarded as a return to fuel subsidy, but as temporary support for domestic refining. “What we are saying is that if Nigerians can make this huge investment, we should support them. Government can intervene by reducing the cost of crude oil to the refinery,” he said. “When the refinery refines the product at a lower cost, it can also reduce the price for Nigerians, and this will help the economy.” The IPMAN president also advocated a more predictable pricing arrangement for crude supplied to domestic refineries, saying frequent fluctuations make it difficult to maintain stable fuel prices. He urged the government and relevant stakeholders to consider mechanisms that would provide greater stability in crude supply and pricing for domestic refiners. Maigandi said a more predictable arrangement would enable refineries to plan their operations more effectively and could help reduce fluctuations in petroleum product prices. Petrol prices rose above N1,300 per litre on September 1 as Brent crude, the global oil benchmark, climbed to $95.36 per barrel. Two days later, IPMAN said filling stations across the Federal Capital Territory would begin reducing petrol pump prices as new product supplies arrived.