Umar says regional pricing hub will improve transparency, support refining growth and reduce reliance on foreign market indices…….
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for the creation of an African fuel pricing benchmark, arguing that the continent needs a regional mechanism that reflects its expanding refining capacity and growing petroleum trade.
The authority said Africa should develop its own recognised reference price for petroleum products instead of depending largely on international pricing indices established outside the continent.
The Chief Executive of NMDPRA, Rabiu Umar, made the call in Abuja on Thursday ahead of the second West Africa Refined Fuel Conference, where discussions will focus on attracting investment into infrastructure, logistics and systems needed to establish a competitive petroleum trading hub in the region.
Umar explained that major energy markets across the world operate regional pricing benchmarks because such systems account for local factors, including supply and demand conditions, transportation costs and market dynamics.
“Every region in the world today has its own pricing benchmark. Whether you’re talking about Europe, Northwest Europe, or America, they have their own benchmarks. Whether you talk about the Mediterranean or the Gulf countries, everywhere you go, there’s a trading index,” he said.
According to him, price discovery is influenced by several factors beyond global market trends, including the cost of moving products into a particular market and the balance between available supply and demand.
He pointed to Europe’s Amsterdam-Rotterdam-Antwerp (ARA) trading hub as an example of how a regional benchmark can support efficient petroleum pricing and supply distribution.
Umar said West Africa could adopt a similar model by creating a central trading hub where petroleum activities across the region can be coordinated and prices determined based on regional realities.
“The whole point of having regional pricing is to be able to create a hub where all the activities within a given region are going to be coming out of that place,” he said.
The NMDPRA chief noted that the expansion of refining capacity across Africa has increased the urgency for a homegrown pricing system, particularly as more countries move toward producing refined petroleum products locally.
He said the emergence of new refining capacity could create opportunities for locations such as Lomé or Lagos to become reference points for petroleum pricing in West Africa.
“We are also looking at Africa moving towards its own refining. So, the more we’re able to refine our products, the more relevant it is to have our own reference pricing and then create that advantage, particularly within the West Africa region,” Umar said.
However, he stressed that refining capacity alone would not be enough to transform the market without significant investment in transportation networks and other supporting infrastructure.
“Infrastructure in oil and gas is the single most important aspect. You can produce anything you want to produce. If you cannot get it out to the market, there’s a problem,” he said.
Umar highlighted the West African Gas Pipeline as an example of infrastructure that has helped strengthen regional energy cooperation.
On petroleum product quality, the NMDPRA chief said Nigeria currently produces cleaner fuels than some countries within the region, adding that ongoing efforts are being made through regional bodies to harmonise fuel specifications.
He said Nigeria’s exported petroleum products meet required standards and generally remain below the 50 parts per million (PPM) sulphur limit, while some markets in the region still operate with higher sulphur content.
The push for an African fuel benchmark comes as the continent, despite being a major crude oil producer, continues to rely heavily on external pricing references for refined petroleum products.
Industry stakeholders have argued that a regional pricing system would improve transparency, reduce logistics costs, strengthen cross-border petroleum trade and support the objectives of the African Continental Free Trade Area (AfCFTA).
With Nigeria’s refining capacity expanding through projects such as the Dangote Refinery and other domestic investments, the country is positioning itself as a potential centre for West Africa’s future petroleum trading and pricing ecosystem.
