Stakeholders mount pressure on FG to reactivate moribund refineries

•NMDPRA: We don’t fix pump prices…

As petrol prices are approaching N1,500 per litre in parts of Nigeria, thereby putting pressure on commuters and transport operators,  the Federal Government has been urged to reactivate its refineries to increase domestic supply and help moderate pump prices.

The energy experts, while justifying the call, said the impact of high petrol costs goes beyond the filling station, as increased fuel expenses are passed through the transport system to commuters.

A former chairman of Major Energies Marketers Association of Nigeria (MEMAN), Adetunji Oyebanji, while speaking with the Nigerian Tribune, argued that bringing the government-owned refineries back into operation would expand Nigeria’s refining capacity and create greater competition in the downstream petroleum market.

According to him, the country needs several functional refineries competing for customers, rather than relying on a limited number of major suppliers.

He identified the Dangote, BUA and government-owned refineries as examples of facilities that could contribute to a more competitive refining market if operating at substantial capacity.

Oyebanji said that competition among refiners could help moderate petrol prices, although it would not necessarily make the product cheap.

“If it’s only one person now, he can say, ‘I will sell at N1.500.’ But if there are three or four big refineries, one may say, ‘In order to get some business, I’ll sell my own at N1.400,’” he said.

He explained that other refiners would then have an incentive to respond to competitive prices in order to retain customers.

“So, it will keep the price moderate, but it’s not that it is going to reduce it completely,” he said.

Also, an energy expert and lecturer at Ignatius Ajuru University of Education, Port Harcourt, Dr Joseph Obele, corroborated Oyebanji, urging the federal authority and the Nigerian National Petroleum Company Limited (NNPCL) to revive the government-owned refineries, saying the rising crude oil prices have continued to put pressure on the cost of petroleum products and worsening the burden on Nigerian households and businesses.

According to him, the restart of the refineries could help strengthen domestic fuel supply and reduce Nigeria’s exposure to international market shocks.

Obele said the government should maximise every available refining capacity in the country rather than depend heavily on external sources of refined petroleum products at a time of rising global crude prices.

“The immediate approach to the recent rise in petroleum prices is to restart the government-owned refineries,” he said.

His position comes as international oil prices have risen amid geopolitical tensions involving the United States and Iran and concerns over potential disruptions around the Strait of Hormuz.

He said the effect of the higher crude prices was already being reflected in Nigeria’s downstream market, with Premium Motor Spirit (PMS) reportedly selling between N1,400 and N1,500 per litre in some locations, while Automotive Gas Oil (AGO) had risen above N2,000 per litre.

According to him, sustained increases in petroleum prices could trigger further increases in transportation, food, medical services and other essential commodities.

“The continuous increase in the cost of petroleum products will invariably affect the prices of virtually all commodities and services. It will create additional inflationary pressure and deepen the financial hardship being experienced by Nigerians,” he said.

Obele therefore called for the immediate return of the Port Harcourt and Warri refineries to sustainable production, arguing that government-owned facilities should complement private-sector refineries in meeting national fuel requirements.

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He said reviving the refineries would not only increase domestic supply but also stimulate activities across the petroleum value chain, including employment for workers, contractors, marketers, transporters and other businesses.

According to him, the prolonged dormancy of government-owned refineries has affected economic activities connected to the facilities and weakened confidence in the country’s ability to fully utilise its petroleum resources.

Oyebanji said the effect of high petrol prices was particularly significant for commuters because transportation operators had to factor fuel costs into fares.

He cautioned against the assumption that local refining alone would automatically result in cheap petrol, saying its more immediate benefits would include increased domestic supply, reduced dependence on imported refined products and stronger competition.

He also recalled the controversies surrounding previous attempts to sell or attract private investment into the government-owned refineries, noting that organised labour had opposed some of the proposals.

Despite those challenges, he maintained that the facilities should be rehabilitated and returned to productive use.

He further stressed that adequate crude supply arrangements would be essential to the success of any refinery; saying operators must have reliable access to crude to sustain production.

The energy expert called for a coordinated strategy involving the rehabilitation of government refineries, expansion of private refining capacity and secures crude supply arrangements.

He said such measures, alongside targeted government intervention for vulnerable households, could help reduce the pressure of rising fuel and transportation costs on Nigerians.

Meanwhile , the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in a statement by its management has explained that the current pricing structure remained governed by the PIA’s free-market framework, saying it does not determine the prices charged at filling stations.

The Authority said its responsibility is to regulate market conduct, enforce applicable standards, promote fair competition and protect consumers, rather than determine the retail price of petrol.

The clarification comes amid growing pressure over the rising cost of Premium Motor Spirit (PMS), with the Nigeria Labour Congress (NLC) and petroleum marketers calling for government intervention as higher fuel costs continue to affect households, transport operators and businesses.

NMDPRA explained that petrol pricing operates under the deregulated framework established by the Petroleum Industry Act 2021 and is therefore determined by market conditions rather than a pump-price template issued by the regulator.

According to the Authority, Section 205(1) of the PIA provides for wholesale and retail petroleum product prices to be based on unrestricted free-market conditions. It added that it does not fix pump prices or issue administrative pricing templates.

According to the regulator, government intervention in petroleum pricing is restricted under Sections 205(2) to 205(4) to exceptional circumstances where there is formal evidence of a declared market failure. It said no such market failure has been declared.

The NMDPRA, however, stressed that deregulation does not remove its responsibility to enforce competition and consumer-protection rules across the downstream market.

It said Section 216 of the PIA empowers it to address anti-competitive practices, price-fixing and abuse of market dominance.

The Authority said it is working with the Federal Competition and Consumer Protection Commission under a memorandum of understanding to monitor practices including price-gouging, collusion, under-dispensing and compromised product quality.

It also plans to establish dedicated reporting channels through which consumers and industry stakeholders can submit complaints about irregular pricing and other exploitative practices for investigation and enforcement.

The regulator said it is further working with the Nigeria Customs Service and other security agencies to strengthen surveillance along border corridors and prevent the illegal diversion of petroleum products out of the country.