West Africa needs own fuel price benchmark, says NMDPRA

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for a regional benchmark for fuel prices in West Africa, stating that crises in Western Europe and the Mediterranean should not automatically dictate oil product prices in Nigeria and other African nations. NMDPRA Chief Executive Rabiu Umar argued that a regional benchmark reflecting the specific market conditions of West Africa is necessary.

Umar emphasized that refining capacity, geopolitical issues, demand and supply, and market complexities should determine prices, rather than external events. The NMDPRA's push for a regional benchmark aims to establish a transparent market structure for refined petroleum products, enhance pricing transparency, and encourage credible market development.

Umar highlighted the need for reliable financing, refinery capacity, stronger logistics and storage networks, interconnected infrastructure, and harmonized regulations. However, he cautioned that regulatory cooperation alone is insufficient to create a functional trading hub and stressed the importance of physical infrastructure, market information, and operational excellence.

Additionally, Umar pointed out that differences in petroleum product specifications across countries hinder cross-border trade, emphasizing the need to standardize product specifications to facilitate smoother trade. Vera Blei, Head of Platts at S&P Global Energy, acknowledged significant progress in developing a credible pricing system in the region but emphasized the necessity for market participants to generate the required liquidity for the benchmark's success.