West Africa Urged to Develop Own Fuel Price Benchmark

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The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) says crises in Western Europe and the Mediterranean should not automatically determine petroleum product prices in Nigeria and other African countries. The Authority's Chief Executive, Rabiu Umar, made the call on Tuesday at the second West Africa Refined Fuel Market Conference in Abuja.

And as Western Europe and the Mediterranean continue to grapple with crises that affect global fuel prices, the NMDPRA boss said West Africa needs a regional benchmark that reflects its own market realities. Umar said this at the conference where regulators, refiners, traders, financiers, and other industry stakeholders renewed efforts to establish a transparent regional pricing system for refined petroleum products.

Vera Blei, the Head of Platts at S&P Global Energy, said the region had made significant progress towards developing a credible pricing system but needed market participants themselves to create the liquidity required for the benchmark to succeed.

The NMDPRA boss said West Africa needed a pricing system based on its own supply, demand, inventory, logistics, refining, and trading conditions. He added that the push for a regional benchmark was not simply about publishing another price but creating an entire market structure capable of generating credible and transparent price discovery.

Umar said regulatory cooperation alone could not create a functioning trading hub. He explained that a reference price is not by itself a trading hub, and that a conference is not a market.

The NMDPRA boss also identified differences in petroleum product specifications across countries as another obstacle to cross-border trade.

Umar said the region had the resources, demand, and refining capacity to create a trading hub but lacked the infrastructure to efficiently connect the three. He stressed that physical infrastructure, commercial liquidity, market information, and operational excellence were essential for a credible trading hub.

And in the midst of these challenges, Umar said the NMDPRA was committed to supporting the development of a regional pricing system.