The Federal Government has warned petroleum marketers against using profits from previously purchased high-cost fuel inventories to justify maintaining elevated petrol prices, insisting that the benefits of lower replacement costs must be passed on to consumers.
The warning came as the government expressed concern over the disconnect between declining global crude oil prices and domestic pump prices of Premium Motor Spirit (PMS), stressing that Nigerians should benefit from lower fuel costs in a fully deregulated market.
The position was made known on Monday during a stakeholders’ meeting on cost-reflective pricing of PMS held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja.
The meeting brought together representatives of Dangote Petroleum Refinery, the Federal Competition and Consumer Protection Commission (FCCPC), the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), and other key stakeholders in the downstream petroleum sector.
Also in attendance were representatives of TotalEnergies, Eterna Plc, Matrix Energy Group, the Depot and Petroleum Products Retailers Association of Nigeria (DAPPMAN), the Major Energy Marketers Association of Nigeria (MEMAN), the Independent Petroleum Marketers Association of Nigeria (IPMAN), the Nigerian Association of Road Transport Owners (NARTO), and officials of the NMDPRA.
Speaking at the meeting, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said temporary gains made from fuel inventories purchased when crude oil prices were higher should not be used to sustain high pump prices after global oil prices had fallen.
He said marketers were expected to reflect lower procurement costs in ex-depot and retail prices as they replenish their stocks at cheaper rates.
“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,” Lokpobiri said.
The minister acknowledged that exchange rates, logistics and supply chain costs also affect petrol pricing but maintained that deregulation should not be exploited to generate excessive profits at the expense of consumers.
He warned that sustaining high fuel prices beyond prevailing market realities could worsen inflation and erode the economic gains recorded over the past year.
“Energy remains a critical input across virtually every sector of the economy. When the cost of energy remains elevated beyond what prevailing market conditions justify, the result is higher transportation costs, rising food prices and increased production expenses.
“While considerable progress has been made in moderating inflation from the 34 per cent recorded in 2024 to the current 15.9 per cent, sustaining high energy costs despite improved market fundamentals risks undermining these gains and slowing the recovery Nigerians are beginning to experience,” he said.
Lokpobiri noted that international crude oil prices traded between $61 and $65 per barrel in January before rising above $118 per barrel in April due to geopolitical tensions in the Middle East. However, he said prices had since fallen to about $71 per barrel following the easing of those tensions.
According to him, while the earlier surge in crude prices led to higher petrol prices, the subsequent decline has not been reflected proportionately at filling stations.
“Ordinarily, such movements in crude oil prices should be reflected in the pricing of refined petroleum products. While the initial increase 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 ₦1,596 per litre in May and currently sells at around ₦1,296 per litre. While there has been some reduction, the adjustment has not been commensurate with the decline in underlying market conditions,” he added.
The minister reiterated that the Federal Government remained committed to protecting consumers in the post-subsidy era, saying deregulation was intended to deepen competition, improve efficiency and deliver value to Nigerians—not create opportunities for excessive pricing or market distortions.
He commended President Bola Tinubu’s economic reforms, including the removal of fuel subsidy and the crude-for-naira initiative, describing them as critical steps toward building a more competitive and investment-driven downstream petroleum industry.
Lokpobiri also directed the NMDPRA to strengthen market surveillance and enforce pricing transparency across the downstream value chain.
“I urge the Authority to intensify market surveillance and ensure that reductions in underlying costs are promptly reflected 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 said.
He further called for the speedy operationalisation of the National Strategic Stock, describing it as essential for enhancing energy security, reducing supply disruptions and moderating future price shocks.
Earlier, the Chief Executive of the NMDPRA, Rabiu Umar, said the meeting was convened at the minister’s directive to address concerns over petrol pricing and ensure Nigerians benefit from improvements in global market conditions.
He recalled that a similar engagement with operators in the domestic gas sector had contributed to a significant reduction in liquefied petroleum gas (LPG) prices and expressed optimism that the same collaborative approach would deliver similar results in the petrol market.
“As a responsible regulator, it is our duty to engage industry operators, understand the operational challenges and address the 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,” Umar said.
