The Federal Competition and Consumer Protection Commission has raised concerns over what it described as possible consumer exploitation in Nigeria’s downstream petroleum sector following the failure of fuel prices to decline significantly despite a sharp drop in global crude oil prices.
The commission said its ongoing market surveillance showed that local refiners, depot operators, marketers and filling station owners had implemented only marginal reductions in fuel prices, a development it said was not commensurate with the steep decline in international crude oil prices.
In a statement issued on Sunday by the FCCPC’s Director of Corporate Affairs, Ondaje Ijagwu, the commission said a review of prevailing gantry and retail prices suggested that consumers were yet to fully benefit from the easing in global oil prices.
The statement read, “The Federal Competition and Consumer Protection Commission has expressed concern over findings from an ongoing surveillance of the downstream petroleum market suggesting undue exploitation of consumers.
“A review of the gantry prices of local refiners, marketers, depot operators and retail outlet operators revealed token reductions in prices that are not commensurate with the steep fall in crude prices in the global market.”
The Executive Vice Chairman and Chief Executive Officer of the FCCPC, Tunji Bello, said the commission was concerned by what appeared to be a one-sided response to changes in crude oil prices.
According to him, operators in the downstream sector often move swiftly to raise pump prices whenever crude oil prices increase but are reluctant to pass on the benefits to consumers when prices fall.
Bello said, “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.
“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.”
The commission’s concerns come amid a sharp reversal in global oil prices following a ceasefire agreement between the United States and Iran and the reopening of the Strait of Hormuz, a major global oil shipping route.
Last week, the price of petrol had remained high even as crude oil prices fell to about $73 per barrel on Wednesday, their lowest level since the US-Iran conflict began in February.
Crude oil prices, which had climbed to about $120 per barrel in April amid fears of supply disruptions arising from the Middle East crisis, have since fallen to around $73 per barrel, returning to levels last seen in February.
The earlier surge in crude prices triggered immediate increases in local fuel prices, with petrol selling for between N1,350 and N1,500 per litre in several parts of the country, while diesel prices climbed to about N2,000 per litre.
In February, however, petrol sold for between N800 and N900 per litre.
Despite the significant decline in crude oil prices, the commission noted that petrol is still being sold at an average of about N1,200 per litre across the country, while some local refiners currently have gantry prices ranging from N1,025 to N1,075 per litre.
Although the FCCPC acknowledged that domestic fuel prices are influenced by several commercial factors, including foreign exchange fluctuations, logistics costs, financing expenses, refining costs and distribution charges, it maintained that competitive market forces should ordinarily have led to more substantial reductions in pump prices.
Bello said, “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 urged Nigerians to continue reporting suspected cases of anti-competitive conduct, price manipulation and other unfair market practices.