The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has introduced new guidelines for petrol import licences, emphasizing transparency and verifiable domestic supply shortfalls. According to Rabiu Umar, Chief Executive of NMDPRA, the policy aims to ensure that import licences are issued based on published merit-based criteria and transparent shortfall determination. This move is expected to promote fair competition and sustainable market practices in the petroleum industry.
The new policy comes as domestic refineries now account for approximately 75 per cent of Nigeria's petrol supply, marking a significant increase in local production. Umar attributed this growth to increased domestic refining capacity, which has helped sustain fuel availability amid disruptions in international energy markets. The regulator reported that imports have declined by more than half within a year, with three litres in every four now refined locally.
Umar highlighted the importance of expanding local production to reduce Nigeria's exposure to external supply shocks and retain more economic value within the country. He cited the impact of the conflict in the Gulf on global energy supplies and crude oil prices, which have risen to about $100 per barrel, as evidence of the need to strengthen domestic refining capacity. This development is seen as a significant achievement in Nigeria's efforts to enhance energy security.
Despite the progress made in domestic refining, Umar cautioned against excessive dependence on a single domestic supplier. He noted that a substantial proportion of Nigeria's current petrol supply comes from one major refinery, which operated above its nameplate capacity in September. To mitigate this risk, the NMDPRA chief stressed the need for a diversified supply base, including support for modular refineries and efforts to restart government-owned refineries.
The NMDPRA will retain import channels as a backup supply option while working with the Nigerian National Petroleum Company Limited (NNPC) towards restoring state-owned refineries. Umar emphasized that energy security requires a diversified supply base, and the authority will continue to ensure that import licences are issued based on transparent and verifiable criteria. This approach aims to promote fair competition and sustainable market practices in the petroleum industry.
On pricing, Umar clarified that the Petroleum Industry Act (PIA) does not empower the NMDPRA to determine petroleum product prices. Instead, the authority is mandated to promote fair competition and transparent market practices. Umar believes that the market will set prices, and the NMDPRA's role is to ensure that market practices are done transparently, sustainably, and at arm's length.
The NMDPRA's new policy is expected to have a positive impact on Nigeria's energy sector, promoting transparency, fair competition, and sustainable market practices. The authority's efforts to enhance domestic refining capacity and diversify the supply base are seen as crucial steps towards achieving energy security and reducing the country's reliance on imported petroleum products. By retaining import channels as a backup supply option, the NMDPRA aims to ensure a stable and secure energy supply for Nigeria.
Key points
- The NMDPRA has introduced stricter rules for petrol import licences, requiring verifiable domestic supply shortfalls and merit-based criteria.
- Domestic refineries now account for approximately 75 per cent of Nigeria's petrol supply, marking a significant increase in local production.
- The NMDPRA aims to promote fair competition and sustainable market practices in the petroleum industry, while ensuring energy security through a diversified supply base.
