The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has stated that the Federal Government of Nigeria lacks the power to directly control petrol prices due to the full deregulation of the downstream oil sector. Lokpobiri made this statement during an interview on Channels Television's Politics Today. He emphasized that petrol prices in Nigeria are influenced by global market forces rather than determined by the Federal Government. This clarification comes amid ongoing debates about petrol prices and domestic refining in Nigeria.
According to Lokpobiri, crude oil and refined petroleum products are traded in an international market, making it challenging for the Nigerian government to arbitrarily determine pump prices without reintroducing fuel subsidies. He explained that Nigeria cannot exist in isolation from global market trends. The minister noted that any attempt to reduce prices would require the government to roll back to a subsidy regime, which is not currently feasible. This stance is in line with the current deregulated structure of the downstream petroleum sector.
Lokpobiri's comments were in response to a proposal by former Vice President Atiku Abubakar, who suggested a production subsidy to enable locally refined petrol to be sold at a lower price to Nigerians. However, Lokpobiri rejected this proposal, citing a lack of legal, fiscal, and financial justification. He argued that Atiku's proposal could not be implemented under the current deregulated structure of the downstream petroleum sector. The minister emphasized that the government's decision to deregulate the sector was in line with global best standards.
The minister also addressed the argument that petrol refined locally should be substantially cheaper simply because it is produced at the Dangote Refinery. Lokpobiri explained that locally produced crude oil supplied to domestic refineries is still traded at international market prices. This means that domestic refining does not automatically translate into government-controlled petrol prices. He noted that the price of crude oil supplied to refineries, including Dangote, is the same as the global price.
Despite rejecting the proposal for a production subsidy, Lokpobiri maintained that Nigerians are already benefiting from increased domestic refining. He cited improved availability of petroleum products and comparatively lower pump prices as evidence of these benefits. The minister noted that the United States, despite being one of the world's largest oil producers, sells petrol at prices that can be higher than Nigeria's average pump price.
Lokpobiri's comments come amid continuing debate over petrol prices, domestic refining, and the impact of deregulation on Nigerian consumers. The removal of petrol subsidy under the Tinubu administration has shifted the pricing structure from government-supported pump prices to a market-based system. Changes in crude oil prices, exchange rates, refining costs, and other market factors now influence the cost of petrol in Nigeria.
The minister emphasized that returning to a system where the government deliberately lowers pump prices would effectively amount to bringing back some form of subsidy. Lokpobiri's clarification aims to inform Nigerians about the current market-based pricing system and the challenges of government intervention in petrol pricing. The government's stance on deregulation and market-based pricing continues to shape the country's petroleum sector.
Key points
- The Nigerian government lacks the power to directly control petrol prices due to the full deregulation of the downstream oil sector.
- Petrol prices in Nigeria are influenced by global market forces rather than determined by the Federal Government.
- The removal of petrol subsidy has shifted the pricing structure to a market-based system, influenced by changes in crude oil prices, exchange rates, and refining costs.
