The Federal Government has warned petroleum marketers against using profits from previously acquired expensive fuel inventories as justification for maintaining high petrol prices, insisting that the benefits of lower replacement costs must be passed on to consumers.
The warning was issued during a stakeholders’ meeting on cost-reflective pricing of PMS held at the headquarters of the Nigerian Midstream and Downstream Petroleum Regulatory Authority on Monday in Abuja.
Speaking at the event, the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said temporary gains realised from inventories purchased when crude oil prices were higher should not become the basis for sustaining elevated pump prices after global oil prices have declined.
According to the Minister, while the government had no objection when petrol prices rose in response to higher crude oil prices, there is now no justification for maintaining high pump prices when global oil prices have fallen significantly.
“I am aware that PMS pricing is influenced by several factors beyond crude oil prices, but it is equally important to distinguish between genuine replacement cost and windfall gains arising from inventory management.
“Temporary gains realised from inventories acquired at higher prices should not become the basis for sustaining elevated pump prices after replacement costs have declined. As inventories are replenished at lower costs, the benefits of those lower costs should be transmitted to consumers in a timely and transparent manner. That is the essence of a competitive and efficiently functioning market,” he stated.
The minister added that the Federal Government remained committed to protecting consumers in the post-subsidy era, stressing that deregulation was not designed to create opportunities for excessive pricing or market distortions but to deepen competition, improve efficiency and deliver value to Nigerians.
He further warned that sustaining high energy costs beyond what prevailing market conditions justify could worsen inflationary pressures and undermine the gains recorded in moderating the country’s inflation rate.
The minister urged petroleum marketers and operators to immediately transmit the benefits of falling global crude oil prices to Nigerian consumers, warning that deregulation should not be exploited to sustain high petrol prices and generate windfall gains.
The meeting, convened at the directive of the Ministry of Petroleum Resources by the sector regulator, had in attendance officials from the FCCPC, Dangote Refinery, MEMAN, DAPPMAN, IPMAN, NARTO, PETROAN among others.
