NMDPRA PUSHES FOR AFRICAN FUEL PRICE BENCHMARK TO BOOST REGIONAL PETROLEUM TRADE
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By Aishat Momoh. O.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has called for the establishment of an African fuel price benchmark, saying the continent must develop its own regional pricing mechanism to reflect its growing refining capacity, enhance market transparency and reduce reliance on foreign pricing indices.
The Chief Executive of NMDPRA, Rabiu Umar, made the call in Abuja on Thursday ahead of the second West Africa Refined Fuel Conference, where stakeholders are expected to discuss strategies for attracting investment into petroleum infrastructure, logistics and regional fuel trading.
Umar said every major energy-producing region of the world already operates a recognised pricing benchmark, stressing that Africa should no longer depend solely on international indices despite increasing investments in refining and cross-border petroleum trade.
He explained that regional pricing benchmarks are essential for accurate price discovery because they reflect local market realities, including supply and demand dynamics, transportation costs and other regional factors.
“Every region in the world today has its own pricing benchmark. Whether you’re talking about Europe, Northwest Europe, America, the Mediterranean or the Gulf countries, each has its own regional trading index,” he said.
According to him, Europe’s Amsterdam-Rotterdam-Antwerp (ARA) trading hub serves as the continent’s principal pricing and supply centre, providing a model that West Africa could replicate to strengthen petroleum trade and improve market efficiency.
“If you look at Europe, Europe has ARA, which is Amsterdam, Rotterdam and Antwerp as the trading hub. Most of Europe gets supplied from there because that’s a hub. The whole point of having regional pricing is to create a hub where activities within a region are coordinated,” Umar stated.
He noted that Africa’s expanding refining capacity makes the establishment of a regional benchmark increasingly important, adding that the continent should leverage its growing downstream sector to develop its own pricing reference.
“We are also looking at Africa moving towards its own refining. The more we’re able to refine our products, the more relevant it becomes to have our own reference pricing. Today, we have Lomé. Tomorrow, that reference price could move to Lagos or somewhere else in the region,” he added.
The NMDPRA boss identified infrastructure as the most critical requirement for building an integrated regional petroleum market, stressing that refining capacity alone would not guarantee efficient product distribution without adequate transportation and logistics networks.
“Infrastructure in oil and gas is the single most important aspect. You can produce as much as you want, but if you cannot get it to the market, there’s a problem,” he said, citing the West African Gas Pipeline as an example of infrastructure supporting regional energy integration.
On fuel quality, Umar said Nigeria currently produces cleaner petroleum products than several countries within the region, noting that locally refined products contain sulphur levels of no more than 50 parts per million (PPM).
“There has been work through ECOWAS and the Africa Refiners Association to harmonise fuel specifications. Nigeria doesn’t produce anything above 50 PPM, and I can confidently say our products are of higher quality than those from some neighbouring countries, where levels can reach 200 PPM,” he said.
Africa remains one of the world’s leading crude oil-producing regions, yet the pricing of most of its petroleum products is still determined using benchmarks developed outside the continent.
Stakeholders have consistently argued that creating an African pricing benchmark would improve price discovery, reduce logistics costs, strengthen regional trade and support the implementation of the African Continental Free Trade Area (AfCFTA).
With expanding domestic refining capacity, led by the Dangote Refinery and other projects, Nigeria is positioning itself to play a central role in the development of a West African petroleum trading and pricing hub.
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