Petroleum Price Log jam: Why The Law Compels NMDPRA To Act Decisively Against Dangote Refinery’s Unilateral Fixation Of Petroleum Prices
NEWWORTH LLP
(Legal Practitioners)
NEWWORTH LLP SPECIAL INTERVENTION SERIES NO.1
PRESS STATEMENT FOR IMMEDIATE RELEASE
4TH NOVEMBER, 2024
PETROLEUM PRICE LOGJAM: WHY THE LAW COMPELS NMDPRA TO ACT DECISIVELY AGAINST DANGOTE REFINERY’S UNILATERAL FIXATION OF PETROLEUM PRICES
We are a firm of lawyers , specializing in energy accountability and we write in public interest to state that by virtue of Sections 32 and 33 of the subsisting Petroleum Industry Act, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is empowered to promote competition and ensure transparency in the pricing of petroleum products by setting benchmark prices.
Many Nigerians, including our humble selves were shocked to bone marrow to read the response of DANGOTE REFINERY
in response to recent criticisms from petroleum industry associations, wherein the Dangote Group defended the pricing and quality of Premium Motor Spirit (PMS) supplied by its refinery, asserting that its products are more competitively priced than imported alternatives.
In a press release signed by Anthony Chiejina, Group Chief Branding and Communications Officer, Dangote Group , it addressed claims made by the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Retail Outlet Owners Association of Nigeria (PETROAN), which suggested that imported PMS could be sold at a cheaper rate than what Dangote offers.
Dangote Group claims it supplies PMS at N960 per liter for ships and N990 for trucks, in comparison to NNPC’s prices of N971 and N990 respectively.
We are of the strong view that the neglect , failure and refusal of the NMDPRA to exercise its powers under the Petroleum Industry Act and leaving poor Nigerians to the estimated prices set by the completely privatized Nigerian National Petroleum Company Limited and the Dangote Refinery will lead to further disaster for majority of Nigerians .
We submit further that international best practices support benchmarking prices . For example, Australia and South Africa both publish regular benchmark prices to protect consumers from excessive pricing and regional disparities. In Europe, many deregulated markets follow a similar model, issuing benchmark prices to prevent predatory pricing and ensure transparency.
Similarly, the UK energy regulator Ofgem, does provide indicative benchmark prices for energy products through its Energy Price Cap.
The price cap sets a maximum price per unit that energy suppliers can charge customers on standard variable tariffs, ensuring prices are fair and reflect actual costs, particularly in volatile market conditions.
This cap is reviewed and updated quarterly, providing guidance that helps prevent profiteering by suppliers in a deregulated market.
Ofgem’s price cap serves a similar purpose to indicative benchmarks in other sectors, including petrol in deregulated fuel markets. It ensures that while suppliers can set their prices based on market dynamics, they do so within a framework that protects consumers from excessive charge.
We call similar approach to be employed by NMDPRA to help mitigate price disparities and prevent predatory pricing practices, especially after the abolition of the Petroleum Equalisation Fund under the Petroleum Industry Act.
Where the NMDPRA refuses, fails and neglects to do the needful, we will be compelled in public interest to approach a court of competent jurisdiction to obtain appropriate orders to mandate it to act in the interest of the majority of Nigerians.
AYODELE ADEMILUYI ESQ.
09097933015
(Whatsapp)
08148252959
(Voicecall)
