Expert knocks regulatory agencies over lack of ‘transparent’ pricing model for petroleum products

Jide Pratt, country manager of Tradegrid, has called for a more transparent pricing model for petroleum products in Nigeria.

Pratt spoke on Wednesday on ‘Business Morning’, a Channels Television programme, calling out the regulatory agencies for failing to develop a guideline for fair pricing.

The energy expert emphasised the need for regulatory oversight that balances market efficiency with fair pricing.

Established in 2003, the Petroleum Products Pricing Regulatory Agency (PPPRA) was the Nigerian government agency that regulated petrol prices.

But in 2021, the agency scrapped and replaced by the Nigerian Upstream Petroleum Regulatory Commission (NURC) and the Nigerian Downstream and Midstream Petroleum Regulatory Authority (NMDPRA).

“Fair pricing means two things: consumers should not be overly burdened with high costs, and investors must get a fair return on their capital,” Pratt said.

“So it means that the regulator’s job is to guide the market.”

Pratt said while deregulation encourages competition, it must be accompanied by clear guidelines to prevent price manipulation.

He said Nigeria lacks a structured price discovery model, which makes fuel pricing unpredictable.

He also stressed the importance of data accessibility.

“We’ve seen prices go up and down arbitrarily. There needs to be a transparent framework that guides market pricing,” he said.

“If I went to the regulator website, I don’t see that guide that ideally should be in the space of the regulator, and what does that do? It opens up transparency so that there’s a method to the prices we’re driving to the pump.

“You should be able to see real-time data on fuel prices and market conditions. That’s how we achieve transparency.”

He cited examples from Ghana and Kenya, where regulatory agencies provide pricing templates to ensure market stability. 

“I believe there should be a price discovery model. Because if you asked an average guy, what do you want most? The average guy will tell you, I just want cheap prices” he added.

‘TRANSPARENCY IS NEEDED TO DRIVE EFFICIENCY’

Pratt said Nigeria must get to a stage where there is transparency in petroleum products pricing.

“The regulator must put a price bar and say that you can’t go beyond this or a price floor,” he added.

“But in doing all these things, two people must be taken care of. The person who runs the investment and also the person who is buying at the pump. So that guiding principle has to be done by price.”

“If the regulator doesn’t do that, then it means players in that space can wake up in the morning  and say I want 100% profit.

“There must be some transparency so that if the regulator has that data, then the regulator can say that, but you’re charging an excess amount here based on what you’ve landed. But if they don’t have that data to compute, they will keep on having this conversation.

“There must be a guiding template. It must be published. It must be transparent. The regulator has to ask the players, what is the basis of price A or price B? Have an understanding, and that way they can protect both person who is investing and the end user.”

Pratt said if fair pricing and transparency is allowed, it would drive competition and efficiency in the sector.