FCCPC flags fuel price fixing, questions delay in aid despite falling global oil prices

The Federal Competition and Consumer Protection Commission (FCCPC) has expressed concern over the slow decline in petrol prices across Nigeria despite a sharp decline in international crude oil prices, and warned that consumers may not receive the full benefit of the market downturn.

According to the commission, findings from ongoing monitoring show that refiners, depot owners, petroleum marketers and petrol station operators have made only minor adjustments to fuel prices, even though crude oil prices have fallen significantly in global markets.

The position was contained in a statement released on Sunday by FCCPC Director of Corporate Affairs, Ondaje Ijagwu, who said an assessment of current gantry and pump prices shows that the reductions implemented so far are well below what global market conditions would normally justify.

The statement read, “The Federal Competition and Consumer Protection Commission has expressed concern over findings from ongoing oversight of downstream petroleum markets that indicate inappropriate exploitation of consumers.

“Reviews of gantry prices carried out by refiners, marketers, depot operators and local retail outlet operators show price declines that are disproportionate to the sharp decline in crude oil prices on the global market.”

The commission’s Deputy Executive Chairman and Chief Executive Officer, Tunji Bello, said the agency was troubled by the imbalance in the way operators responded to fluctuating international oil prices.

He observed that marketers are typically quick to raise oil prices when crude becomes more expensive, but much slower to lower prices when global markets move in the opposite direction.

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Bello said, “To be clear, the Commission does not regulate or approve petroleum prices in deregulated downstream markets. Our responsibility under the Federal Competition and Consumer Protection Act of 2018 is to promote competitive markets, prevent anti-competitive behavior, and protect consumers from unfair, deceptive and exploitative business practices.

“We are concerned that while traders often respond quickly by raising gas pump prices whenever crude oil prices rise, what is surprising is that it takes consumers so long to see significant gains when crude oil prices fall. A competitive market must work equally in both directions.”

The commission’s intervention follows the recent fall in global crude oil prices after tensions in the Middle East eased with a ceasefire between the United States and Iran and the reopening of the Strait of Hormuz, one of the world’s most strategic oil shipping routes.

Although crude oil prices have fallen to around $73 a barrel, down sharply from $120 a barrel in April due to concerns about supply disruptions, domestic gasoline prices remain high.

The previous spike in crude oil prices has triggered price hikes at petrol stations, with petrol selling for between ₦1,350 and ₦1,500 per liter in many parts of the country, while diesel prices rose to around ₦2,000 per litre.

In comparison, petrol was selling for between ₦800 and ₦900 per liter in February before the spike in international oil prices.

Despite the decline in crude oil prices, the FCCPC noted that petrol prices still average around ₦1,200 per liter nationwide, while gantry prices offered by some local refiners currently range between ₦1,025 and ₦1,075 per liter.

While recognizing that petrol pump prices are influenced by factors such as exchange rate movements, logistics, financing costs, refining costs and distribution costs, the commission stated that market competition should result in more tangible reductions for consumers.

Bello said, “Market liberalization does not diminish businesses’ obligations to compete fairly or consumers’ rights to fair treatment. If there is credible evidence indicating conduct that undermines competition, exploits consumers, or otherwise violates the Federal Competition and Consumer Protection Act, the Commission will investigate and take appropriate enforcement action.”

He also encouraged Nigerians to report suspected cases of price manipulation, anti-competitive behavior and other unfair business practices through the complaint channels established by the commission.

The FCCPC’s latest position is expected to renew public debate on the effectiveness of deregulation of downstream petroleum markets in Nigeria, as consumers and industry observers continue to question why significant declines in international crude oil prices are not reflected in petrol pump prices.

Since the elimination of fuel subsidies and the liberalization of the downstream petroleum sector, domestic fuel prices have become increasingly linked to global crude oil movements and foreign exchange rate dynamics. However, consumer advocates have repeatedly argued that although marketers quickly raise prices during periods of rising crude oil prices, price reductions are often delayed when market conditions improve.

The commission said its oversight could lead to regulatory action if evidence emerges that pricing practices in the sector violate competition laws or unfairly harm consumers.