FCCPC has raised the alarm over high petrol prices despite drop in global crude oil.
NewsOnline Nigeria reports that the Federal Competition and Consumer Protection Commission (FCCPC) has raised concerns over what it described as possible consumer exploitation in Nigeria’s downstream petroleum sector, following the failure of petrol prices to decline significantly despite a sharp fall in global crude oil prices.
The commission said findings from its ongoing market surveillance indicate that local refiners, depot operators, petroleum marketers and filling station owners have implemented only marginal reductions in fuel prices, despite the steep decline in international crude oil prices.
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In a statement issued on Sunday by the FCCPC’s Director of Corporate Affairs, Ondaje Ijagwu, the commission said its review of prevailing gantry and retail prices suggests that consumers have yet to benefit fully from the easing in global oil prices.
“The Federal Competition and Consumer Protection Commission has expressed concern over findings from an ongoing surveillance of the downstream petroleum market suggesting undue exploitation of consumers.
“A review of the gantry prices of local refiners, marketers, depot operators and retail outlet operators revealed token reductions in prices that are not commensurate with the steep fall in crude prices in the global market,” the statement read.
The Executive Vice Chairman and Chief Executive Officer of the FCCPC, Tunji Bello, said the commission was concerned by what appeared to be a one-sided response by operators to movements in global crude oil prices.
According to Bello, marketers and dealers often increase pump prices almost immediately whenever crude oil prices rise but are slow to pass on the benefits to consumers when international oil prices decline.
“To be clear, the Commission does not regulate or approve petroleum prices in a deregulated downstream market. Our responsibility under the Federal Competition and Consumer Protection Act, 2018, is to promote competitive markets, prevent anti-competitive conduct, and protect consumers from unfair, deceptive and exploitative business practices.
“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is curious that it is taking forever for consumers to benefit significantly when crude prices fall. Competitive markets must work fairly in both directions,” Bello said.
The FCCPC’s concerns come as global crude oil prices have dropped sharply following the ceasefire between the United States and Iran and the reopening of the Strait of Hormuz, a critical global oil shipping route.
Crude oil prices, which climbed to about $120 per barrel in April amid fears of supply disruptions caused by tensions in the Middle East, have since fallen to around $73 per barrel, their lowest level since February.
The earlier rally in crude prices triggered immediate increases in domestic fuel prices, with petrol selling for between ₦1,350 and ₦1,500 per litre in many parts of Nigeria, while diesel prices rose to around ₦2,000 per litre.
In February, however, petrol was sold for between ₦800 and ₦900 per litre.
Despite the significant decline in crude oil prices, the FCCPC noted that petrol continues to sell for an average of about ₦1,200 per litre nationwide, while gantry prices at some local refineries currently range between ₦1,025 and ₦1,075 per litre.
Although the commission acknowledged that domestic fuel prices are influenced by several commercial factors, including foreign exchange movements, logistics, financing costs, refining expenses and distribution charges, it maintained that competitive market conditions should ordinarily have resulted in more substantial reductions at the pumps.
Bello stressed that deregulation does not exempt businesses from complying with competition and consumer protection laws.
“Market liberalisation does not diminish businesses’ obligations to compete fairly or consumers’ right to fair treatment. Where credible evidence indicates conduct that undermines competition, exploits consumers or otherwise contravenes the Federal Competition and Consumer Protection Act, the Commission will investigate and take appropriate enforcement action,” he said.
He urged Nigerians to report suspected cases of anti-competitive behaviour, price manipulation and other unfair business practices through the commission’s official complaint channels.
The FCCPC’s intervention is expected to reignite debate over the effectiveness of Nigeria’s deregulated petroleum market, as consumers and industry stakeholders continue to question why lower international crude oil prices have not translated into proportional reductions in pump prices.
Since the removal of fuel subsidy and the deregulation of the downstream petroleum sector, petrol prices have become largely dependent on movements in global crude oil prices and foreign exchange rates. However, consumer groups have repeatedly accused marketers of implementing price increases almost immediately while delaying price cuts whenever market conditions improve.
The commission said its findings could trigger further regulatory scrutiny of pricing practices in the downstream sector as pressure mounts on operators to ensure that the benefits of lower crude oil prices are passed on to Nigerian consumers.
