The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for the establishment of an African fuel price benchmark, arguing that the continent must develop its own regional pricing mechanism to reflect its expanding refining capacity, improve market transparency and reduce dependence on foreign pricing indices.
The authority said every major energy-producing region already operates a recognised pricing benchmark and insisted that Africa should no longer remain an exception as investment in refining, logistics and cross-border petroleum trade continues to grow.
The Chief Executive of the NMDPRA, Rabiu Umar, made the call in Abuja on Thursday ahead of the second West Africa Refined Fuel Conference.
According to Umar, the conference will focus on attracting investment into the infrastructure and logistics required to establish a transparent and competitive petroleum pricing and trading hub for West Africa.
He explained that regional pricing benchmarks are essential because they reflect local market realities instead of relying solely on international indices.
“Every region in the world today has its own pricing benchmark. Whether you’re talking about Europe, Northwest Europe or America, they have their own benchmarks. Whether you talk about the Mediterranean or the Gulf countries, everywhere you go there is a trading index. It is a global index, but there is a specific index for that region.
“Why does it exist? Because the process of pricing starts with price discovery, taking into account several factors such as demand and supply, logistics costs and other market dynamics to determine a reference price.”
Umar cited Europe’s Amsterdam-Rotterdam-Antwerp (ARA) trading hub as a successful model, noting that it serves as the principal pricing and supply centre for much of the continent.
He said West Africa should adopt a similar framework to strengthen regional trade, improve price discovery and create a competitive petroleum market.
“If you look at Europe, it has ARA—Amsterdam, Rotterdam and Antwerp—as its trading hub. Most of Europe is supplied from there because it serves as a regional hub. The whole idea of regional pricing is to create a centre where trading activities within the region are anchored.
“It has a lot to do with logistics costs, the cost of moving products into the region, and whether supply exceeds demand or vice versa. All these factors contribute to effective price discovery and a market-reflective price.”
The NMDPRA chief noted that the rapid growth of refining capacity across Africa has made the establishment of a regional pricing benchmark more urgent.
“We are also looking at Africa moving towards greater self-sufficiency in refining. The more refined products we produce locally, the more relevant it becomes to have our own reference pricing and create that competitive advantage, particularly within West Africa. Today, we have Lomé. Tomorrow, that reference price could shift to Lagos or another regional hub.”
Umar identified infrastructure as the most critical requirement for building an integrated regional petroleum market, stressing that increased refining capacity alone would not guarantee efficient distribution without adequate transportation and logistics networks.
“Infrastructure in the oil and gas industry is the single most important factor. You can produce as much as you like, but if you cannot move the products to the market, then you have a problem. Infrastructure is what makes distribution possible.”
He pointed to the West African Gas Pipeline as an example of infrastructure that has strengthened regional energy integration.
“Today, we have a gas pipeline running across West Africa. That means gas produced in Nigeria can be delivered to Ghana, Togo or Benin Republic. Without that investment, you cannot create the momentum needed for regional integration.”
He, however, observed that inadequate port facilities, shallow draft depths and limited pipeline infrastructure continue to constrain petroleum trade across the sub-region.
“If you don’t have ports with the required capacity and draft depth, larger vessels cannot berth, forcing reliance on smaller ships. Where pipelines are absent, the movement of petroleum products is equally constrained.”
Umar also called for harmonised fuel quality standards across African countries, describing inconsistent product specifications as one of the biggest obstacles to cross-border petroleum trade.
“If the fuel specification in Nigeria is materially different from that of a neighbouring country, it becomes difficult to facilitate product exchange or cross-border movement.”
Responding to questions on fuel quality, the NMDPRA chief said petroleum products refined in Nigeria currently meet higher environmental standards than those in several neighbouring countries.
“There has been significant work through ECOWAS and the Africa Refiners Association to harmonise fuel specifications. Once a common standard is adopted, we will have uniform quality requirements across the region.
“To the best of my knowledge, Nigeria does not produce fuel above 50 parts per million (ppm) sulphur. The products we export meet specification and, in many cases, are of higher quality than those supplied by some neighbouring countries, where sulphur levels can be as high as 200 ppm.”
He also credited the Dangote Petroleum Refinery with improving fuel supply in Nigeria and neighbouring countries despite recent disruptions in the global oil market.
“Thanks to the Dangote refinery, we saw how local supply remained stable even during the Strait of Hormuz crisis. We have also seen how the refinery has supported product supply to neighbouring countries. We will continue to strengthen collaboration and deepen regional integration.”
Umar said this year’s West Africa Refined Fuel Conference, organised in partnership with S&P Global Commodity Insights and the West Africa Regulators Forum, will build on the achievements of the maiden edition held last year.
According to him, the inaugural conference led to the establishment of the West Africa Regulators Forum, the publication of West African reference prices and the opening of S&P Global Commodity Insights’ regional office in Abuja.
