African Consumers Bear Brunt of Foreign Fuel Price Benchmarks — NMDPRA

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said reliance on external fuel-price benchmarks is distorting West Africa’s petroleum-products market and exposing the region to price shocks that may have little connection with local market realities.

The Authority’s Chief Executive, Rabiu Abdullahi Umar, said West Africa needed to develop a regional refined-fuel benchmark that reflected its own supply, demand, refining capacity, logistics and market conditions.

Umar spoke at the second West African Refined Fuel Market Conference in Abuja, themed “Funding West Africa Infrastructure and Distribution to Create a Transparent Market for Regional Price Benchmarks.”

He said it made little sense for developments in Western Europe or the Mediterranean to determine fuel prices in Africa when such developments might have no direct relationship with conditions in the region.

“If there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa. There may be issues which have absolutely nothing to do with what is going on there,” Umar said.

According to him, fuel prices should be influenced by the actual fundamentals of the market, including regional supply and demand, refining output, inventory levels, logistics costs and local geopolitical conditions.

He said a West African benchmark would enable the region to respond more accurately to its own market conditions and reduce its vulnerability to external disruptions.

“If we have a problem, it is reflected in the prices. If we don’t have a problem, then we are shielded, to an extent, from what is going on in other locations,” the NMDPRA chief said.

Need for regional benchmark

Umar said Africa had long remained primarily a producer and consumer of hydrocarbons while much of the pricing, trading intelligence and commercial value associated with those resources continued to be determined outside the continent.

He argued that the region possessed the basic ingredients required to establish a credible petroleum-pricing and trading centre, including resources, demand and expanding refining capacity.

However, he said the region needed to develop the infrastructure and market institutions required to connect refineries with storage facilities, terminals, ports and demand centres.

“Africa must progress from being principally a price taker in global petroleum product markets to becoming an increasingly credible centre of price discovery, trading, investment and value creation,” he said.

The proposed regional market, he explained, would not be based solely on the publication of a price index. It would require sufficient physical supply, commercial transactions, market liquidity, reliable data and confidence among market participants.

“A reference price is not by itself a trading partner. A conference is not a market,” Umar said, stressing that a functioning benchmark must be supported by actual market activity.

Infrastructure gaps

The NMDPRA chief identified inadequate infrastructure as one of the major obstacles to the development of an integrated West African fuel market.

He listed refineries, pipelines, storage facilities, marine terminals, ports, rail and road networks, strategic reserves, digital trading platforms and product-tracking systems among the assets required to improve the movement and visibility of petroleum products across the region.

Umar said infrastructure investment should focus not only on expanding assets but also on reducing the cost and inefficiency associated with transporting fuel from one market to another.

He noted that in some cases, it was cheaper to import products from Europe than to move them between neighbouring African countries because of trade barriers, regulatory inconsistencies and other costs.

“It is cheaper to bring goods, in some cases, from all the way from Europe than it is to move from one country, a neighbouring country, to another,” he said.

He urged governments, regulators and private-sector operators to create an environment in which investors could commit capital to long-term infrastructure projects.

According to him, predictable regulation, efficient operations and sustainable returns would be essential to attracting financing for pipelines, storage, transportation systems, refinery upgrades, ports and digital market infrastructure.The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said West African consumers bear the consequences of relying on foreign fuel-price benchmarks that may not reflect the region’s actual market conditions.
The Authority’s Chief Executive, Rabiu Abdullahi Umar, said developments in Western Europe and the Mediterranean could influence fuel prices in Africa even when they had little connection with local supply, demand, refining capacity or market conditions.
Umar spoke at the second West African Refined Fuel Market Conference in Abuja, themed “Funding West Africa Infrastructure and Distribution to Create a Transparent Market for Regional Price Benchmarks.”
He said the region needed to establish a credible refined-products benchmark based on African market fundamentals rather than continuing to rely largely on price references developed outside the continent.
According to him, external benchmarks expose West Africa to the effects of geopolitical tensions, supply disruptions and market volatility in other regions.
“If there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa. There may be issues which have absolutely nothing to do with what is going on there,” Umar said.
He said such external price movements could increase the cost of petroleum products for consumers and make it more difficult for governments, businesses and other market participants to plan effectively.
Regional benchmark needed
Umar said Africa possessed the resources, demand and expanding refining capacity required to develop a regional pricing and trading hub.
He argued that the continent should move away from its position as principally a price taker in global petroleum-product markets and become a credible centre of price discovery, trading, investment and value creation.
“If we have a problem, it is reflected in the prices. If we don’t have a problem, then we are shielded, to an extent, from what is going on in other locations,” he said.
A regional benchmark, he added, would allow prices to reflect West Africa’s own supply and demand conditions, inventory levels, refining output, logistics costs and market disruptions.
He stressed, however, that publishing a reference price alone would not be enough to create a functioning market.
“A reference price is not by itself a trading partner. A conference is not a market,” Umar said.
He explained that a credible benchmark would require actual transactions, willing buyers and sellers, reliable reporting, sufficient market liquidity and confidence that published information reflected genuine commercial activity.
Infrastructure constraints
The NMDPRA chief identified inadequate infrastructure as a major obstacle to the development of an integrated regional fuel market.
He listed pipelines, storage facilities, terminals, ports, roads, railways, marine logistics, strategic reserves and digital trading platforms as essential components of the regional market infrastructure.
Umar said the purpose of the infrastructure should be to lower the cost of moving products, improve energy security, strengthen inventory visibility and facilitate the movement of fuel from refineries and storage facilities to areas of demand.
He noted that it was sometimes cheaper to import products from Europe than to transport them between neighbouring African countries because of trade barriers, regulatory inconsistencies and other logistical costs.
“It is cheaper to bring goods, in some cases, from all the way from Europe than it is to move from one country, a neighbouring country, to another,” he said.
According to him, these inefficiencies ultimately affect the price paid by consumers, while also limiting the competitiveness of local refiners, traders and distributors.
Product standards, regulations
Umar also called for greater harmonisation of petroleum-product specifications and regulatory processes across West Africa.
He said differing fuel standards between neighbouring countries made cross-border transactions more difficult and restricted the efficient movement of products within the region.
“Even our right-next-door neighbours have different product specifications. What that does is that it makes trading across the border very, very difficult,” he said.
He urged the West Africa Regulators Forum to promote regulatory convergence, information-sharing and compatible market rules to facilitate safe and transparent cross-border trade.
The countries, he said, did not necessarily need identical laws, but their regulations had to be sufficiently compatible to support regional commerce.
Data and market transparency
Umar said transparent and reliable market data was essential to the creation of a credible regional benchmark.
He said information on supply, demand, inventories, infrastructure availability and legitimate transactions would improve commercial decisions and help regulators monitor the market more effectively.
“A credible benchmark cannot emerge from an opaque market,” he said.
He added that investors, refiners, traders, regulators and consumers needed access to credible African data to understand the fundamentals driving fuel prices in the region.
“Markets operate on information. Benchmarks operate on trust,” Umar said.
Vera Blei, Head of the Price Reporting Business at Platts, S&P Global Energy, said regional participants needed to take an active role in establishing West African benchmarks.
She said Platts could provide transparent price assessments, data and market information, but market participants would have to use those references in actual transactions for them to develop into credible benchmarks.
Blei said Platts had expanded its regional assessments and introduced more frequent market updates in response to heightened volatility and the need for greater transparency.
She said the company had also developed diesel and jet-fuel assessments in naira per litre based on regional domestic fundamentals.
From roadmap to implementation
Umar said the region had made progress since the inaugural conference through stronger regulatory cooperation, progress towards regional reference pricing and deeper collaboration with S&P Global Commodity Insights.
He said the progress represented only the foundation of a broader market-development process.
“In 2025, we developed the roadmap. In 2026, we must finance and execute it,” he said.
He urged governments, regulators, investors, financial institutions and operators to support infrastructure development, improve operational efficiency and remove barriers to cross-border trade.
According to him, a successful West African fuel market would improve supply security, expand regional trade, increase investor confidence and enable prices to reflect the realities of the region.
He said the NMDPRA remained committed to working with regional partners to build a transparent and resilient African reference market that would reduce exposure to external price shocks and help consumers benefit from a more efficient petroleum-products market.