The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said West Africa’s plan to establish a regional benchmark for refined petroleum products will require stronger infrastructure, market liquidity and reliable price information.
Chief Executive of the NMDPRA and Chairman of the West Africa Regulator Forum, Rabiu Umar, said this on Tuesday at the second West Africa Refined Fuel Market Conference in Abuja.
The conference was jointly hosted by the NMDPRA, S&P Global Commodity Insights and the West Africa Regulator Forum under the theme “Funding West Africa Infrastructure & Distribution to Create a Transparent Market for Regional Price Benchmarks”.
Umar said the region needed a pricing system that reflected its own supply, demand, inventory, logistics, refining and trading conditions, rather than being automatically influenced by developments in Western Europe and the Mediterranean.
“If we look at the refining capacity on the continent and how it has been increasing, it simply doesn’t make sense that if there is a problem in Western Europe or in the Mediterranean, it is going to affect our pricing in Africa,” he said.
He said regional prices should instead respond to geopolitical developments, demand and supply dynamics and other factors specific to the West African market.
According to him, the proposed benchmark is not intended to isolate the region from international markets but to ensure that local market conditions are better reflected in petroleum product prices.
Umar said establishing a credible benchmark would require more than publishing a reference price, noting that West Africa needed the infrastructure and market depth to support actual trading.
“Last year, our focus was on establishing the foundation. This year, our focus must be on execution,” he said.
He identified reliable financing, expanding refinery capacity, logistics and storage networks as key requirements for developing the regional market.
The NMDPRA chief also highlighted the need for interconnected ports, roads, rail and pipelines, harmonised product regulations and standards, transparent market data, stronger cross-border cooperation and access to regional and international capital.
“A reference price is not by itself a trading hub. A conference is not a market,” Umar said.
He added that regulatory cooperation alone could not substitute for physical infrastructure, commercial liquidity, market information and operational efficiency.
“Africa possesses resources. Africa possesses demand. Africa possesses refining capacity, and that is also expanding. What we must now build is the infrastructure that efficiently connects all three,” he said.
Umar also identified differences in petroleum product specifications among West African countries as a barrier to deeper regional trade.
He said variations in product quality and specifications could make cross-border trading more difficult and limit the development of an integrated regional market.
“We cannot have from here to Nigeria, to Ghana, to the United Republic, even our right-next-door neighbours having different products and specifications. What that does is that it makes trading across the border very, very difficult,” he said.
He called for greater harmonisation of product standards across the region to facilitate cross-border petroleum trade.
Vera Blei, Head of Platts at S&P Global Energy, said West Africa had made progress towards developing a credible regional pricing system but needed market participants to create the liquidity required for the benchmark to succeed.
“We publish gasoline and refined product price benchmarks for the region. They’re transparent, they’re robust, and have become the references in Nigeria and West Africa,” Blei said.
She urged regional stakeholders to take ownership of the proposed benchmark and turn the existing price references into an actively functioning market.
“We can give the foundations. We can make the reference prices available. It’s down to everybody in this room to take bold steps to really bring them alive,” she said.
