No justification for high petrol prices as crude oil costs fall – FCCPC

The Federal Competition and Consumer Protection Commission (FCCPC) has warned petroleum refiners and marketers against maintaining high petrol and diesel prices despite the recent decline in international crude oil prices, insisting that the benefits of lower production costs must be reflected at filling stations.

The Commission said it was closely monitoring developments in the international oil market to ensure that the sustained decline in crude prices translates into lower costs for Nigerian consumers.

Tunji Bello, Executive Vice Chairman and Chief Executive Officer of the FCCPC, gave the assurance in a statement signed by Ondaje Ijagwu, Director of Corporate Affairs, following public enquiries over the continued high prices of petroleum products despite the recent decline in global crude oil prices.

Latest market reports indicate that Brent crude futures have fallen from a peak of $115 per barrel in September to below $90 this week, raising expectations of a possible reduction in domestic petrol prices.

However, petrol prices in Nigeria currently average between N1,405 and N1,420 per litre in Abuja, while consumers in Lagos pay between N1,325 and N1,370 per litre.

The Commission noted that on February 27, a day before the outbreak of the conflict involving the United States, Israel and Iran, Brent crude futures closed at $72.48 per barrel. At the time, petrol sold for between N839 and N925 per litre at filling stations in Lagos and Abuja.

Petroleum marketers have frequently attributed the increase in domestic fuel prices over the past eight months to volatility in international crude oil prices following the outbreak of the US-Iran conflict in the Middle East and the subsequent blockade of the Strait of Hormuz.

The strategic waterway accounts for at least 25 per cent of global oil traffic, making disruptions to shipping through the route a major source of uncertainty in international energy markets.

Bello, however, maintained that if the decline in crude oil prices is sustained, refiners and marketers would have little justification for keeping petrol and diesel prices at elevated levels.

“If the decline in crude prices is sustained, there is no justification for refiners and marketers to continue to keep petrol and diesel prices relatively high. We expect easing in wholesale petrol costs and for the resulting savings to reach consumers at the pump without undue delay,” he said.

He acknowledged the economic difficulties Nigerians have faced as a result of high petrol prices, assuring consumers that the Commission would continue to monitor developments in the downstream petroleum market to prevent unfair pricing practices.

“We are aware of the difficulties high pump prices have caused Nigerians for some time now. Let me reassure you that the Commission will continue to work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other relevant government agencies to track wholesale and retail petrol prices,” Bello said.

He warned that the Commission would intervene where evidence emerges of anti-competitive conduct or unfair market practices preventing consumers from benefiting from declining costs.

“Where there is evidence of anti-competitive conduct or unfair practices that prevent consumers from benefiting from lower costs, we will take appropriate action within our mandate,” he added.

The FCCPC’s position comes amid continued concerns over the impact of elevated petroleum prices on transportation costs, household expenditure and the operating expenses of businesses, particularly manufacturers and small and medium-sized enterprises.

Petrol price movements remain a major concern for Nigerian consumers and businesses because of the country’s dependence on petroleum products for transportation, power generation and other productive activities.

The Commission said its engagement with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other relevant agencies would focus on tracking wholesale and retail pricing trends to ensure that consumers are not denied the benefits of favourable movements in international crude oil prices. (BusinessDay)