The Executive Secretary and Chief Executive Officer of the Major Energy Marketers Association of Nigeria (MEMAM) Mr. Clement Isong, says petroleum price capping comes with market distortions and lacks in competitiveness among operators.
Though the MEMAN commended the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) for its push in promoting product quality, deployment of digital licensing, and the prompt publication of market driven data and the regulator’s drive towards advancing measures to foster fair competition in Nigeria, nonetheless market distortions comes with regular uncompetitive initiatives.
Speaking at a virtual webinar organised by the Association in partnership with S&P global energy, Isong while speaking on one of the discussion points of the webinar, “Structuring Nigeria’s domestic distribution framework” said government arbitrary price caps are not solutions to the petroleum market challenges in Nigeria.
Isong noted that rather than it’s continued distortion of market prices, government should rather focus more on transparent, market driven pricing regime, efficient distribution and the adoption of measures that could help address supply bottlenecks and reduction of operating costs.
The MEMAN CEO also advocated a well-structured market that would enable competition, improve supply security to support better outcomes for customers without necessarily relying on government imposed price controls or broad based fuel subsidies.
Isong in his presentation also outined other priorities for improving the efficiency and resilience of Nigeria’s domestic distribution market.
The MEMAN CEO declared that supply coordination can be achieved only if government can prioritise domestic refinery output and using imports on the other hand to bridge supply gaps to manage disruptions.
Isong said bulk supply arrangements can also be achieved through the establishment of clearer terms of engagement to help drive product access, pricing, delivery schedules including contractual obligations amongst others.
Speaking on another discussion point of the webinar, “Developing a west african reference market”, S&P global energy acknowledged how geopolitical tensions from the middle east crisis including refining disruptions and changing global supply dynamics continues to impact on petroleum products pricing and the pressure foist on middle distillates, particularly diesel and aviation fuel.
The S&P global energy in calling for an urgent need for regional pricing benchmarks that better reflect West African market conditions noted that greater transparency, reliable market data and industry adoption will be essential to building a credible reference market.
The webinar which also touched on technology and alternative energy reinforced the importance of developing a transparent and competitive petroleum market supported by credible pricing, coordinated supply arrangements, efficient distribution infrastructure and fair regulation.
The webinar also acknowledged that strengthening the domestic distribution framework alongside the development of a West African reference market can substantially improve supply, support market participants and enhance consumer confidence in Nigeria’s downstream space.
The webinar was moderated by Ogechi Nkwoji, head, economic intelligence research and regulation, MEMAN and had Mr Gary Clark, Mathew Tracey-cook making presentations on behalf of S&P global energy.