Nigeria’s downstream petroleum regulator says it cannot set petrol prices because the Petroleum Industry Act (PIA) 2021 requires fuel prices to be determined by an open market, unless a formally established market failure justifies government intervention.
Key takeaways
- The PIA permits state action on petroleum pricing only in exceptional cases supported by an officially declared market failure.
- The NMDPRA’s powers include tackling price manipulation, collusion and abuse of market power rather than prescribing pump prices.
- Border monitoring with the Nigeria Customs Service and other security bodies is being intensified to curb fuel smuggling and protect consumers.
- A joint monitoring arrangement with the FCCPC targets overcharging practices, short delivery and substandard petroleum products.
- The regulator said it recognises the financial pressure created by the latest increase in petrol prices for households, transport operators and businesses.
Why the regulator cannot set pump prices
The Nigerian Mainstream and Downstream Petroleum Regulatory Authority said on Saturday that its inability to impose a petrol price stems from the legal limits established by the PIA. In a statement published through its verified X account, the authority said the law confines government involvement in price setting to unusual situations in which there is documented proof that the market has failed.
Rather than determine retail prices, the NMDPRA is authorised to act against conduct that undermines competition. Its remit includes stopping anti-competitive behaviour, coordinated price-setting and the exploitation of dominant market positions.
The authority also said it is working with the Nigeria Customs Service and other relevant security agencies on a coordinated security operation. The initiative is increasing checks along border routes to disrupt petroleum smuggling, strengthen consumer safeguards and improve oversight of market activity.
Monitoring competition and consumer protection
Through a memorandum of understanding with the Federal Competition and Consumer Protection Commission, the NMDPRA said it runs an intensive joint surveillance programme. The programme is designed to identify collusion and price fixing, failures to deliver the quantity paid for, and deterioration or tampering affecting product quality.
The regulator reaffirmed that it would carry out its responsibilities under the PIA by supporting energy security, encouraging fair competition and defending consumers within the boundaries of the law.
It acknowledged the severe financial hardship facing Nigerians after the latest rise in petrol pump prices. The agency said it understood the burden placed on households, transport workers and companies, adding that it supported efforts to achieve relief as market conditions become more stable.
Explaining the rules governing its role and the measures under way to assist consumers, the NMDPRA cited Section 205(1) of the 2021 PIA. That provision states that wholesale and retail petroleum prices must reflect unrestricted free-market conditions.
The agency said it neither determines pump prices nor issues official pricing templates. It added that Section 205(2) to (4) limits government intervention to exceptional circumstances backed by formal evidence of a declared market failure. No such failure has been declared, it said.
