Fuel Hike: The Regulator’s Alibi

Petrol now sells for between N1,400 and N1,500 a litre in many Nigerian cities. Confronted with the outrage that followed, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) did what regulators too often do: it explained why the increase was not its fault.

In a statement issued on September 19, the NMDPRA said it does not fix pump prices. It cited Section 205(1) of the Petroleum Industry Act, which places wholesale and retail pricing under unrestricted free-market conditions. This is technically correct. We believe it is also, standing alone, an evasion of what a regulator is for.

The trigger for the latest surge is easy to trace. The Dangote Petroleum Refinery raised its gantry price by N85, from N1,265 to N1,350 per litre, as international crude benchmarks pushed past $100 a barrel. Marketers passed the increase down the chain within days. By the weekend, filling stations in Lagos and Abuja were charging as much as N1,450. To its credit, the NMDPRA did not pretend the pain was imaginary. “We are fully sensitive to the pressure this places on households, transport workers, and businesses across the country,” the Authority said, promising relief once market conditions stabilise. Sympathy from a regulator is not a substitute for regulation.

The NMDPRA’s defence rests on Sections 205(2) to 205(4) of the PIA, which restrict government intervention in pricing to exceptional circumstances involving a formally declared market failure. No such declaration has been made, the Authority says, and so its hands are tied. But what, in a downstream sector dominated by a single domestic refiner and a handful of import channels, would a market failure look like if not this? A price change at one gantry, felt at every pump in the country within a weekend and with no competing pressure to slow it, is not the behaviour of a competitive market. It is the behaviour of a chokepoint dressed in the language of deregulation.

Section 216 of the same Act gives the NMDPRA power to act against price-fixing and abuse of market dominance. The Authority mentioned this power in its statement, alongside a Memorandum of Understanding with the Federal Competition and Consumer Protection Commission and joint surveillance with the Nigeria Customs Service against price-gouging and cross-border diversion. Nigerians have heard this before, during earlier price spikes, and heard the same promises of patrols and partnerships. What has rarely followed is a published finding: a marketer sanctioned, a case of collusion established, a chokepoint named and dismantled. Memoranda are cheap. Enforcement Nigerians can see is what is owed.

Deregulation was sold to this country as a route to efficiency and supply security once the fuel subsidy was removed, and we do not dispute that logic in principle. But a regulator cannot invoke the free market only when prices rise, and go quiet on the free market’s most basic requirement, competition, when asked why a change at one refinery moves the entire national price overnight. It cannot be turned into a shield behind which the Authority declines to ask whether the market it oversees is a market at all, or merely one firm’s pricing decision handed down the chain.

The human cost falls hardest on people with no cushion. Transport fares track fuel prices with brutal speed, and every increase drags up the price of food and the cost of moving goods from farm to market. Small businesses that depend on generators, which remains the case for most, given the state of the national grid, absorb the increase twice: once in fuel for machines, and again in fuel for movement. The NMDPRA’s statement acknowledged this pressure in the abstract. What Nigerians need is a regulator that treats the acknowledgement as the beginning of an inquiry, not the end of a press release.

This newspaper is not calling for a return to administered pricing or a resurrection of the subsidy regime that nearly broke the treasury before it was removed. That road has been travelled, and its costs are well documented. We are asking that the NMDPRA use the statutory instruments it already possesses, rather than reciting the market-forces clause of the PIA each time a price shock lands and stopping there. An audit of how the Dangote gantry price feeds into retail pricing, and a public accounting of margins at each stage of the chain, would cost the Authority nothing but the will to look.

The National Assembly, too, has a role beyond receiving the NMDPRA’s periodic briefings. Committees on petroleum resources should summon the Authority to explain, under scrutiny, why the downstream sector behaves like a single-firm market whenever prices move and like a competitive one only in official statements.

A regulator that only ever explains why it cannot act is not regulating. It is narrating. Until the NMDPRA can show Nigerians an enforcement record and not just a citation from the statute books, every fresh gantry adjustment will bring the same statement, the same sympathy, and the same silence on why the market never seems to work the other way.