Nigeria’s consumer protection regulator has warned fuel marketers and other downstream petroleum operators against exploiting consumers by failing to reflect the recent decline in global crude oil prices in retail petrol prices.
The Federal Competition and Consumer Protection Commission (FCCPC) said it is monitoring pricing practices across the downstream petroleum market after observing that reductions in depot and retail fuel prices have lagged the sharp fall in international crude oil prices following the easing of geopolitical tensions in the Middle East.
Executive Vice Chairman and Chief Executive Officer of the FCCPC, Tunji Bello, said the Commission would investigate and sanction any operator found to be engaging in anti-competitive, deceptive or exploitative practices under the Federal Competition and Consumer Protection Act (FCCPA), 2018.
“To be clear, the Commission does not regulate or approve petroleum prices in Nigeria’s deregulated downstream market,” Bello said. “Our responsibility is to promote competitive markets, prevent anti-competitive conduct and protect consumers from unfair, deceptive and exploitative business practices.”
Crude Prices Retreat, Pump Prices Remain Elevated
The Commission noted that international crude oil prices have fallen sharply since peaking during the recent conflict involving the United States, Israel and Iran.
According to the FCCPC, crude prices climbed to around $120 per barrel at the height of the Middle East tensions in April before declining to about $73 per barrel following the ceasefire and the reopening of the Strait of Hormuz.
Despite the decline, petrol prices in Nigeria have remained relatively high.
At the peak of the oil price rally, petrol sold for between N1,350 and N1,500 per litre, while diesel prices approached N2,000 per litre in several markets. Before the geopolitical crisis, petrol had traded at between N800 and N900 per litre.
Although retail prices have eased in recent weeks, the Commission said petrol continues to sell at an average of about N1,200 per litre nationwide, while some local refiners have reduced ex-depot prices to between N1,025 and N1,075 per litre.
Global benchmark Brent crude was trading at about $72.44 per barrel at the time of the Commission’s statement, down significantly from the levels recorded during the conflict.
Regulator Cites Fair Competition Concerns
Bello said the Commission was concerned that marketers typically respond quickly to increases in global crude prices by raising pump prices, yet reductions in international oil prices often take considerably longer to reach consumers.
“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is taking much longer for consumers to benefit when crude prices fall,” he said. “Competitive markets should work fairly in both directions.”
The FCCPC stressed that although fuel prices in Nigeria are no longer government-controlled following the deregulation of the downstream petroleum sector, market liberalisation does not exempt businesses from complying with competition and consumer protection laws.
The regulator said it would intervene where credible evidence shows that businesses are engaging in anti-competitive conduct, price manipulation or other practices that undermine fair competition.
Multiple Factors Influence Fuel Prices
Industry analysts note that movements in international crude oil prices do not automatically translate into equivalent reductions in retail fuel prices.
Domestic pump prices are also influenced by exchange rate fluctuations, refining costs, logistics, transportation, financing costs, storage expenses and marketers’ inventory purchased at higher prices.
Nevertheless, economists argue that sustained declines in global oil prices should gradually reduce wholesale and retail fuel prices in a competitive market once existing inventories are depleted.
Implications for Inflation
Lower fuel prices are closely watched in Nigeria because transportation and energy costs have a significant impact on inflation and household spending.
A sustained reduction in petrol prices could ease operating costs for businesses, lower transport fares and reduce inflationary pressures across the broader economy.
Conversely, prolonged delays in passing lower input costs to consumers could slow the transmission of global oil price declines into domestic economic relief.
Consumers Encouraged to Report Unfair Practices
The FCCPC urged consumers to report suspected cases of misleading pricing, anti-competitive conduct and other unfair market practices through the Commission’s official complaint channels.
Bello said every credible complaint would be investigated, adding that the Commission remains committed to ensuring that the benefits of competition in Nigeria’s liberalised petroleum market are shared fairly between businesses and consumers.
The warning comes as policymakers continue to monitor the performance of Nigeria’s deregulated fuel market, where competition, rather than government price controls, is expected to determine retail pricing while remaining subject to consumer protection and competition laws
