West Africa may be moving closer to a major shift in how petroleum products are priced, as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) calls for a regional fuel price benchmark that reflects the realities of African markets. The Authority says disruptions in Western Europe and the Mediterranean should not automatically dictate fuel prices in Nigeria and other West African countries when local market conditions may be completely different.
NMDPRA Chief Executive and West Africa Regulator Forum Chairman, Rabiu Umar, made the call at the second West Africa Refined Fuel Market Conference in Abuja. The event brought together regulators, refiners, traders, financiers and other industry players to discuss how the region can establish a more transparent and reliable pricing system. Umar argued that fuel prices should be influenced by factors such as regional demand and supply, refining capacity, inventories, logistics and local geopolitical conditions rather than events thousands of kilometres away.
According to Umar, creating a regional benchmark is about much more than simply announcing another fuel price. He said West Africa needs a complete market structure capable of supporting credible price discovery and efficient trading. This would require stronger refinery capacity, storage facilities, ports, roads, rail and pipeline networks, as well as better market data, financing and cooperation between countries. “Last year, our focus was on establishing the foundation. This year, our focus must be on execution,” he said.
One of the major challenges identified is the difference in petroleum product specifications across West African countries. Umar warned that varying standards make it harder for countries to trade refined products across borders and limit the development of a truly integrated regional market. He stressed that Africa already has the resources, growing demand and expanding refining capacity needed to build a stronger petroleum market; what is missing is the infrastructure and coordination to connect them efficiently.
S&P Global Energy’s Head of Platts, Vera Blei, said significant progress had already been made in developing transparent fuel price references for Nigeria and West Africa. However, she noted that the success of the proposed benchmark would ultimately depend on market participants creating enough trading activity and liquidity around it. For West Africa, the push could mark an important step towards a fuel market where prices better reflect regional realities, potentially making the region less vulnerable to price movements caused by disruptions in distant markets.
source: punch
