The Federal Competition and Consumer Protection Commission (FCCPC) has raised concerns over what it described as the slow reduction in petrol prices by refiners, marketers, depot operators, and retailers despite the sharp decline in global crude oil prices,
The Commission in a statement issued on Sunday by its Director of Corporate Affairs, Ondaje ljagwu, warned that businesses found exploiting consumers could face sanctions.
The FCCPC said its ongoing surveillance of the downstream petroleum market showed that recent reductions in gantry and retail prices have not been commensurate with the significant fall in crude oil prices on the international market.
What the FCCPC is saying
According to the FCCPC, while petroleum prices in Nigeria often increase rapidly whenever global crude prices rise, consumers have yet to enjoy similar benefits from the recent price decline.
Commenting on the development, the Executive Vice Chairman and Chief Executive Officer of the FCCPC, Tunji Bello, stressed that although the Commission does not regulate petroleum prices in Nigeria’s deregulated downstream sector, it remains responsible for ensuring fair competition and protecting consumers from exploitative practices.
- “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,” Bello said.
- “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,” he added.
More insights
The Commission noted that global crude oil prices have declined sharply following the ceasefire between the United States and Iran and the reopening of the Strait of Hormuz about two weeks ago.
According to the FCCPC, crude oil, which climbed to about $120 per barrel in April during heightened geopolitical tensions in the Middle East, has since fallen to around $73 per barrel, returning to levels last seen in February.
During the period of elevated crude prices, petrol prices in Nigeria rose rapidly to between N1,350 and N1,500 per litre, while diesel sold for as much as N2,000 per litre.
Although some local refiners have reduced their ex-depot prices to between N1,025 and N1,075 per litre, the Commission observed that petrol is still selling for an average of about N1,200 per litre across the country, significantly above the N800 to N900 per litre average recorded in February.
FCCPC vows enforcement where necessary
While acknowledging that domestic fuel prices are influenced by several commercial factors, including refining costs, foreign exchange movements, logistics, financing, and distribution expenses, the Commission said it expected market competition to ensure consumers benefit more quickly from declining costs.
Bello warned that deregulation does not exempt businesses from complying with competition laws or treating consumers fairly.
- “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.
The FCCPC also urged consumers to report suspected anti-competitive practices, misleading pricing, and other unfair market conduct through its established complaint channels as it continues monitoring developments in the downstream petroleum sector.
What you should know
Nairametrics recently reported that petrol marketers in the country are projecting a drop in the price of fuel to the point that vehicle owners, who had converted to CNG would be forced to convert back to petrol.
However, while crude oil prices have dropped, in most cases, to the point they were before the U.S.-Iran conflict started in February, petrol prices in Nigeria have remained above N1,000 at filling stations.
Before the crisis, petrol was selling between N800 and N900 across the county. Many Nigerians are expecting the prices to come back to this level going be the latest developments in the global oil market.
