Despite the fact that the downstream sector of the petroleum industry has been deregulated, it is still far from achieving those things that could make people describe it as a truly deregulated market.
This assertion is rooted in the fact that a fully deregulated sector is suppose to promote competition among stakeholders, encourage transparency, but these factors are currently not felt by consumers.
For instance, the hallmark of a deregulated downstream should be competition at its best, but, the market is current struggling with Anti-Competitive Challenges which have also led to the creation of artificial scarcity of fuel, inflated pump prices in different regions, Limited new market entrants, collusion among dominant players and Hoarding during policy transitions.
Elements of a Competitive Market are: Numerous active players,
Ease of entry and exit for businesses, Regulatory neutrality (no bias toward any player), transparent pricing and market practices, empowered consumers can switch suppliers
On the other hand, Anti-Competitive Behaviour breeds Price-fixing and collusion, abuse of market dominance, hoarding or artificial scarcity ,Market allocation (carving up territory or customers) and Bid rigging
Unfortunately, Our laws and regulations in this country are lagging behind global best practices, and because of these, the anti competition forces have dominated the sector. The laws and regulation are breached anyhow by some stakeholders who feel they are above the law. They flout these rules and regulation and the agencies that are suppose to enforce them are helpless in the face of highly weird intimidations
There are examples of places where Global Best Practices in Managing Anti-Competition in Downstream Petroleum are carried out, and also, effectively enforced. In a place like the United States, there is an Antitrust Enforcement: DOJ/FTC block mergers, prevents single firm conduct, penalize collusion (e.g., Valero Energy case).
- Market Transparency: EIA reports on inventory & pricing reduce hoarding & manipulation.
- Open Access: FERC mandates 3rd-party pipeline/storage access (e.g., Colonial Pipeline).
European Union
- Unbundling: Vertical separation of infrastructure from operations (Third Energy Package).
- Merger Control: European Commission halts anti-competitive retail overlaps (e.g., Shell/Dea).
- Real-Time Pricing Disclosure: Daily pump price audits (e.g., Italy’s price dashboard).
- Antitrust Rules: Prohibition of horizontal agreements and cartels
In most cases, Nigeria’s situation is just the opposite of what is obtained in the climes mentioned above.
Here are some Benefits of Competition for Consumers
Lower and fairer prices at the pump, improved service delivery at filling stations Product innovation and transparency Incentivizes modular refineries and new entrants
For Nigeria to experience effective competition in the downstream there must be Strong, Independent Regulators (e.g., FTC, EC, CADE) are critical. Competition Oversight protects new entrants from major players entrapment
