The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, has said crises in Western Europe and the Mediterranean should not automatically determine petroleum product prices in Nigeria and other African countries, arguing that West Africa needs a regional benchmark that reflects its own market realities.

The Authority Chief Executive, Rabiu Umar, said this on Tuesday at the second West Africa Refined Fuel Market Conference in Abuja, where regulators, refiners, traders, financiers and other industry stakeholders renewed efforts to establish a transparent regional pricing system for refined petroleum products.

The conference is jointly hosted by the Authority, S&P Global Commodity Insights and West Africa Regulator Forum, with the theme: “Funding West Africa Infrastructure & Distribution to Create a Transparent Market for Regional Price Benchmarks.”

Umar, who also doubles as the WARF Chairman, said, “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.

“There may be issues which have absolutely nothing to do with what is going on here. And prices should be determined on the basis of geopolitical issues, demand and supply, and complexities within the market. So we feel this is a great opportunity for Africa, and West Africa in particular, to really have something that is specific to us.

“If we have a problem, it is reflected in the pricing. If we don’t have a problem, then we are to be shielded to an extent, I would say, from what is going on in other locations.”

He said West Africa needed a pricing system based on its own supply, demand, inventory, logistics, refining and trading conditions, adding that the objective was not to isolate Nigeria from the international petroleum market but to ensure that regional prices accurately reflected the realities of the market being served.

The NMDPRA boss said 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. “Last year, our focus was on establishing the foundation. This year, our focus must be on execution,” Umar said.

He said the roadmap required reliable financing, refinery capacity, stronger logistics and storage networks, interconnected ports, roads, rail and pipelines, harmonised product regulations and standards, transparent market data, stronger cross-border cooperation and regional and international capital.

Umar said regulatory cooperation alone could not create a functioning trading hub. “A reference price is not by itself a trading hub. A conference is not a market. Regulatory cooperation, important as it is, cannot substitute for physical infrastructure, commercial liquidity, market information, and operational excellence on which a credible trading hub must stand.

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

“We also have the second issue of what is the quality of products. What is the specification of products from one country to another? We cannot have from here to Nigeria, to Ghana, to the United Republic, even our right-next-door neighbors having different products and specifications. What that does is that it makes trading across the border very, very difficult.”

Also speaking, the Head of Platts at S&P Global Energy, Vera Blei, 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.

She said, “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 challenged regional stakeholders to take ownership of the proposed benchmark. “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.”