West Africa needs own fuel price benchmark, says NMDPRA

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for West Africa to establish its own benchmark for fuel prices, emphasizing that regional pricing should reflect the specific market realities of the area, rather than being dictated by events in Western Europe or the Mediterranean. NMDPRA Chief Executive Officer Rabiu Umar made the point at the second West Africa Refined Fuel Market Conference in Abuja, which brought together regulators, refiners, traders, financiers, and other industry stakeholders to discuss creating a transparent regional pricing system.

Umar argued that the increasing refining capacity across the continent should not automatically dictate fuel prices in Africa, as issues in distant regions should not automatically impact local prices. He stressed that the new pricing system would take into account factors such as geopolitical issues, demand and supply, and market complexities, rather than relying on external events.

Umar also highlighted the need for a robust infrastructure, including reliable financing, refinery capacity, and better logistics and storage networks, to support a functioning trading hub. He pointed out that differences in petroleum product specifications across countries also pose a challenge to cross-border trade. Vera Blei, Head of Platts at S&P Global Energy, noted that while significant progress has been made in developing a credible pricing system, market participants themselves need to create the liquidity required for the benchmark to succeed.