ABUJA — The Federal Competition and Consumer Protection Commission (FCCPC) has launched an extensive investigation into potential consumer exploitation across Nigeria’s downstream petroleum sector. The regulatory crackdown follows a widening disparity between plummeting international crude oil benchmarks and sticky local pump prices.
Despite global crude oil crashing by nearly 40%—dropping from an April peak of $120 per barrel to approximately $73 per barrel following a ceasefire agreement between the United States and Iran and the reopening of the Strait of Hormuz—domestic fuel pricing has remained stubbornly high.
The “Rocket and Feather” Dilemma
According to the FCCPC, ongoing market surveillance shows that local refiners, depot operators, marketers, and filling station owners have introduced only “token” reductions. The agency’s Executive Vice Chairman and Chief Executive Officer, Tunji Bello, expressed deep concern over the asymmetric pricing behavior of downstream operators.
“We are concerned that while dealers often respond swiftly by hiking pump prices whenever crude prices rise, it is curious that it is taking forever for consumers to benefit significantly when crude prices fall,” Bello stated. “Competitive markets must work fairly in both directions.”
Energy economists frequently refer to this phenomenon as the “rocket-and-feather effect”—where retail fuel prices shoot upward like a rocket during global oil supply disruptions but drift downward as slowly as a feather when market tensions ease.
Bridging the Pricing Disconnect
During the height of the Middle East crisis between April and May, local petrol prices aggressively leaped to between ₦1,350 and ₦1,500 per litre, while diesel soared to ₦2,000 per litre.
By contrast, when global crude traded at the current $73 level back in February, domestic petrol retailed for a much lower ₦800 to ₦900 per litre. Currently, motorists nationwide still face an average pump price of ₦1,200 per litre.
While the prominent Dangote Petroleum Refinery recently initiated a marginal price cut—trimming its Premium Motor Spirit (PMS) gantry price by ₦50 from ₦1,175 to ₦1,125 per litre—the commission believes broader market adjustments are severely lagging.
Regulatory Scrutiny vs. Market Liberalization
The FCCPC clarified that while it does not directly set or regulate fuel prices in the newly deregulated market, its mandate under the Federal Competition and Consumer Protection Act (FCCPA) of 2018 fiercely empowers it to prevent anti-competitive conduct and shield consumers from unfair business practices.
The agency acknowledged that local pricing models are tied to variables such as:
- Foreign exchange fluctuations
- Importers’ logistics and financing costs
- Refinery cycles and distribution charges
However, the commission firmly maintains that true competitive market forces should have driven much deeper cuts by now. The FCCPC has warned that operators found guilty of price-fixing, artificial scarcity, or deliberate delays in passing relief to consumers will face severe statutory sanctions.
To better understand why domestic fuel costs refuse to mirror international energy market corrections, you can watch Channels TV’s analysis on why fuel isn’t cheaper in Nigeria, which breaks down the economic bottlenecks preventing immediate consumer relief.
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