Oil Marketers Reject FG's Proposed N1,350 Petrol Price Ceiling

The Major Energies Marketers Association of Nigeria (MEMAN) has rejected the federal government's proposed N1,350-per-litre ceiling on the cost of petrol, arguing that arbitrary price limits would distort competition without addressing the underlying problems in the downstream petroleum market.

The association set out its position during its third-quarter press engagement held virtually in partnership with S&P Global Energy, maintaining that "government arbitrary price caps are not the solution to petroleum market challenges."

What the government is proposing

The ceiling was announced by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who said the government is negotiating a limit of N1,350 a litre on the ex-gantry or landing cost of petrol, to be reviewed monthly. Under the arrangement, refiners and importers would initially absorb any costs above the ceiling and recover the shortfall later when market conditions improve.

"We are introducing price modulation. When costs rise above the ceiling, refineries and importers will carry the shortfall and recover it later. This is neither a subsidy nor price control," Oyedele has said, framing the measure as a way to stop pump prices following every swing in global crude or the exchange rate rather than a return to the subsidy regime abolished in May 2023.

Why marketers say it will not work

MEMAN's counter-argument is that controlling prices at one point in the chain without lowering the cost of sourcing, transporting, storing and distributing fuel leaves structural problems untouched, while discouraging the competition that delivers reliable supply. The association called instead for transparent, market-driven pricing, clearer bulk supply arrangements covering product access, pricing and delivery schedules, better inventory visibility and storage, and measures to reduce operating costs.

For downstream operators, the proposal also raises hard questions about financing: how refiners and importers would fund any shortfall, the terms on which they would be reimbursed, and what happens to supply if recovery arrangements are delayed or uncertain. With crude oil trading near $110 a barrel and the landed cost of petrol already close to N1,350, a ceiling at that level would bind immediately.

Regulation, benchmarks and the road ahead

MEMAN commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority for progress on product quality, digital licensing, market data and fair competition, and advocated non-discriminatory access to products. The engagement also examined the case for credible West African pricing benchmarks, with S&P Global Energy highlighting the Free on Board West Africa and STS Lome assessments as reference points for domestically supplied and imported products.

The unresolved tension

The debate distils a tension that has followed Nigeria's deregulation from the start: shielding consumers from volatile global prices versus keeping a commercially viable supply chain. No ceiling has yet taken effect, and with the government's 30-day forecourt discount already struggling to show up at the pump, the design of any permanent mechanism will decide whether prices stabilise or the burden simply shifts between the treasury, marketers and motorists.