The federal government has announced that international crude oil prices will determine petrol pump price fluctuations following the full deregulation of the downstream sector. This shift was confirmed by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, during the Petroleum Industry Stakeholders Forum (PISF) in Abuja. With the removal of government Regulation on petrol prices, market forces will now dictate costs at filling stations. This policy change follows a recent increase in depot prices from ₦909 to ₦970 per litre.
Lokpobiri stated that deregulation aims to allow market forces to stabilise prices and reduce the need for Subsidies naturally. He explained that as global crude oil prices rise, petrol costs in the country will also increase, while decreases in global oil costs will result in lower domestic petrol prices. He cited his observations during the last Christmas season in Bayelsa, where varying pump prices reflected a competitive market. This variation, ranging from ₦999 to ₦1,050 per litre, illustrates the influence of market dynamics.
Government is focusing on quality control and product availability.
According to the minister, the government’s primary focus is ensuring quality control, product availability, and accurate fuel dispensation at filling stations. Lokpobiri assured the public that regulatory measures would focus on verifying the quantity dispensed to consumers, emphasising that a purchase of 10 litres should equate to exactly 10 litres delivered. This vigilance, combined with market competition, provides consumers with options, reducing the likelihood of fuel queues. Furthermore, the government reaffirmed its commitment to maintaining Premium Motor Spirit (PMS) availability while ensuring quality control across filling stations.
After a meeting with industry players in Abuja, Lokpobiri stressed that while the government cannot control oil costs due to international market influences, it remains focused on quality and measurement accuracy. Deregulation allows consumers to choose from various filling stations based on pricing and service quality. The minister’s observations last year further underscored the variations in pricing, with consumers having multiple options without experiencing fuel scarcity. This outcome highlights a key benefit of deregulation, which includes reduced queues and increased availability despite cost fluctuations.
Challenges within the Nigerian oil sector and strategies for improvement.
Despite these positive developments, Lokpobiri acknowledged persistent challenges within the oil sector, such as excessive taxation. Nigeria currently imposes over 271 taxes and levies, among the highest globally. This Tax burden affects operational efficiency and contributes to rising costs in the downstream sector. To address these issues, the government has been working to streamline Tax Policies and resolve conflicts between regulatory agencies. Lokpobiri noted the importance of policy coherence in preventing overlapping regulations that can disrupt the sector.
Meanwhile, the Petroleum Industry Stakeholders Forum (PISF) serves as a collaborative platform for industry leaders to address challenges and align on policy recommendations. Modeled after the Bankers’ Committee meetings, the forum encourages dialogue among stakeholders to ensure sustainable growth within the oil and gas sector. The Petroleum Technology Association of Nigeria (PETAN) Chairman, Wole Ogunsanya, reaffirmed the association’s support for government efforts to stabilise the industry. He emphasised the need for long-term strategies to mitigate the cyclical nature of oil cost fluctuations.
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A key achievement under the current administration has been Nigeria’s ability to meet its OPEC production quotas. Ogunsanya emphasised that Nigeria has been producing at levels aligned with OPEC allocations for the first time in years. This achievement reflects progress in stabilising production despite past struggles. However, these ongoing reforms, supported by government initiatives and industry collaboration, aim to create a more efficient and resilient oil market. This shows that the country is moving towards a more transparent and consumer-friendly downstream petroleum sector by addressing Taxation issues, ensuring quality control, and promoting competition.