FCCPC Raises Concerns Over Delayed Benefits from Falling Oil Prices
The Federal Competition and Consumer Protection Commission (FCCPC) is voicing its concerns about consumers not fully reaping the benefits of recent drops in global oil prices. The commission has indicated that it may impose sanctions on companies found guilty of exploiting consumers in the downstream oil sector.
Recent monitoring of downstream oil markets has revealed that the reductions in prices by local refiners, distributors, warehouse operators, and retailers have not aligned with the sharp decline in global oil prices. This discrepancy has raised red flags for the FCCPC.
Tanji Bello, the Executive Vice Chairman and Chief Executive Officer of the FCCPC, emphasized the commission’s role in a statement made on Sunday. While the FCCPC does not regulate or approve oil prices in Nigeria’s deregulated downstream market, it operates under the Federal Competition and Consumer Protection Act of 2018 (FCCPA) to foster competition, curb anti-competitive practices, and protect consumers from unfair and exploitative business conduct.
Bello further highlighted a troubling trend in market behavior, noting that participants tend to respond quickly to rising oil prices by increasing pump prices, yet there is often a significant delay in passing on price reductions to consumers when oil prices fall. He remarked, “It is strange that dealers often react quickly when oil prices rise, but when these prices fall, it takes far too long for consumers to feel the benefits. Competitive markets must function fairly in both directions.”
The FCCPC has observed that oil prices have dropped to approximately $73 per barrel from a high of $120 in April, following a cease-fire agreement between the U.S. and Iran and the subsequent reopening of the Strait of Hormuz. As a result, global oil prices have reverted to levels comparable to those seen in February.
In previous instances, the increase in crude oil prices led local refiners and distributors to raise gasoline prices nationwide to around ₦1,350 per liter, with diesel reaching up to ₦2,000 per liter during the April-May period. Although gasoline was priced between ₦800 and ₦900 per liter in February, the current national average sits at about ₦1,200 per liter, with some refiners reducing depot prices to between ₦1,025 and ₦1,075.
While acknowledging that factors such as refining costs, exchange rate variations, logistics, and distribution expenses impact domestic fuel pricing, the FCCPC stresses that competitive market dynamics could have permitted consumers to benefit from lower global oil prices much sooner.
Bello cautioned that market liberalization does not absolve businesses of their duty to compete fairly or diminish consumers’ rights to fair treatment. He affirmed that if credible evidence arises indicating conduct that stifles competition or exploits consumers, the FCCPC will undertake investigations and enforce appropriate actions. He also encouraged consumers to report suspected anti-competitive or misleading pricing practices via the commission’s established complaint channels.
