The Africa Centre for Energy Policy (ACEP) has reiterated its stance for the National Petroleum Authority (NPA) to scrap the fuel price floor policy in the downstream petroleum sector amid ongoing controversies.
Some oil marketing companies (OMCs) have in the past week demanded that government abolishes the policy following the recent dip in fuel prices, arguing the decision could relieve consumers of fuel taxes and enjoy less costs.
Introduced in 2024, the policy sets a minimum retail price for gasoline, diesel, and liquefied petroleum gas (LPG).
The energy policy thinktank had noted the directive was in inconsistent with legislation provided under the NPA Act, 2005 (Act 691), where they further cited numerous concerns negatively impacting the sector.
They indicate several of NPA’s functions are outdated in the deregulated market and continues to impose what they say are ‘unnecessary’ levies on consumers and industry players.
On the price floor policy, ACEP argued the policy reflects deepening regulatory failure rather than a solution to sector challenges, which is fostering the influx of illicit and substandard petroleum products, and tax revenue losses through non-compliance by some oil marketing companies.
They further highlight the policy as excessive pass-through levies and charges to consumers which creating persistent anti-competitive practices including price undercutting.
“Price floors reward inefficiency, discourage competition, and increase fuel costs for consumers, while disproportionately benefiting weaker OMCs and BIDECs struggling to compete,” a statement posted on social media noted.
It continued that: “NPA’s own admission of substandard products and unethical practices suggests knowledge of offending players, yet the Authority has failed to apply targeted enforcement, opting instead for broad protectionist measures”.
ACEP notes that about 15% of the OMCs supply nearly 90% of the market, while over 160 OMCs account for only 10%, raising concerns about sustaining the inefficient market structure at consumers’ expense.
They are therefore calling for progressive, data-driven regulation focused on enforcing standards, sanctioning violators, and promoting fair competition without stifling innovation.
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