FG Declines Oil Price Fixing, Raises Concerns Over Fuel Supply Deficit
The Federal Government has reaffirmed its stance against manipulating crude oil prices, emphasizing adherence to international best practices. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has clarified that it will uphold a “willing-seller, willing-buyer” model to ensure the optimal functioning of the sector while maintaining a transparent and investor-friendly market environment.
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Government’s Position on Oil Pricing
Engr. Gbenga Komolafe, the Commission Chief Executive (CCE) of the NUPRC, reiterated that the federal government will not impose price regulations on crude oil sales, maintaining a free-market approach in line with global standards. He emphasized the Commission’s commitment to fostering sectoral growth while addressing operational challenges constructively.
Komolafe assured industry stakeholders that concerns regarding crude supply obligations and pricing discrepancies would be reviewed objectively. “The government is committed to ensuring that the upstream sector operates efficiently without resorting to price-fixing,” he stated.
Industry Concerns and Stakeholder Engagement
The NUPRC convened a crucial meeting with key industry players in Abuja to deliberate on domestic crude supply obligations, operational constraints, and pricing concerns. Attendees included representatives from the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG). Discussions centered on pre-allocation of crude to domestic refiners, the impact of existing supply commitments, and the regulatory framework governing domestic crude supply.
As part of its strategy to enhance production and regulatory compliance, the Commission introduced a five-point agenda aimed at increasing crude output by one million barrels in 2025. This plan includes tightening hydrocarbon measurement regulations, streamlining compliance through digitization, optimizing production costs, and revitalizing non-performing oil assets through licensing bid rounds.
Regulatory Actions and Compliance Measures
To ensure a stable domestic fuel supply, the NUPRC has enforced the Domestic Crude Supply Obligation (DCSO) by implementing the Production Curtailment and Domestic Crude Oil Supply Obligation Regulation 2023. It has also introduced a framework to oversee crude allocation for local refining. The Commission has warned that non-compliant operators risk being denied export permits for crude oil intended for domestic refining, reinforcing its commitment to enforcing regulatory compliance.
Komolafe clarified that the restriction on export permits applies strictly to operators failing to meet domestic supply obligations and is not a blanket policy against industry players. “The government will protect investor interests but will not compromise on national energy security,” he stated.
Fuel Supply Shortfall: NNPC and Dangote Refinery Under Scrutiny
Despite efforts to enhance domestic refining capacity, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has raised concerns over the shortfall in fuel supply. According to the agency, Nigeria’s three functional refineries, including the much-anticipated Dangote Refinery, are supplying less than 50% of the country’s petrol consumption needs.
This revelation underscores persistent inefficiencies in the sector, raising concerns over the country’s heavy reliance on fuel imports despite significant investments in domestic refining infrastructure. While the government has taken steps to regulate crude supply to refineries, the actual production output remains inadequate to meet national demand, leaving consumers vulnerable to price fluctuations and supply chain disruptions.
As the administration navigates these challenges, industry stakeholders continue to call for decisive policy measures to address production bottlenecks, improve refining capacity, and establish a more sustainable energy framework for the country.
Reference
FG Declines Oil Price Fixing, Raises Concerns Over Fuel Supply Deficit