West Africa Moves Towards Unified Fuel Pricing Framework
West African midstream and downstream regulators have concluded plans to form a new forum to harmonise fuel prices and strengthen petroleum product trading across the region.
The move was one of the key outcomes of the inaugural West African Refined Fuel Market Conference jointly organised by the Nigerian Midstream and Downstream Petroleum Regulatory Authority and S&P Global Commodity Insights, which took place in Abuja recently.
The conference, themed ‘West Africa Refined Fuel Market: Pathway to a Regional Reference Market’, focused on achieving development of petroleum products and natural gas trading hubs in Nigeria, enhancing petroleum products and natural gas pricing and quality standardisation reflective of West African market fundamentals, improving market and data transparency, and accelerating downstream investments through trade zones and digital market platforms.
According to a communiqué issued yesterday by NMDPRA’s Public Affairs Department on its website, the West African Regulators Forum and a Technical Working Group would be constituted to ensure effective coordination of the conference outcomes and follow-up actions.
The NMDPRA, in collaboration with the African Refiners and Distributors Association, is to oversee the activities of the Forum, the communiqué stated.
It added that the forum would ensure that timelines contained in the roadmap are adhered to by strategic partners and that challenges in intra-African trade, such as infrastructure gaps, tariff barriers, exchange rate bottlenecks and lack of uniformity in product specifications, are addressed wholesomely.
The summary of additional key outcomes yielded by various stakeholders and participants at the d onference include “the provision of incentives for expansion of refining capacity and support for domestic refiners through adequate feedstock supply; the establishment of independent and transparent price assessments for the region, leveraging expert market insights; the development of a harmonised pricing framework and product quality standards by the relevant government bodies; the development of a roadmap in collaboration with the relevant stakeholders to ensure implementation and performance monitoring of the conference outcomes; and the constitution of the West African Regulators Forum and Technical Working Group, to ensure effective coordination of the conference outcomes and follow-up actions.”
Other key outcomes from the conference included the provision of incentives for expansion of refining capacity, establishment of independent and transparent price assessments for the region, evolution of innovative funding schemes by African financial institutions for regional infrastructure, and development of a harmonised pricing framework and product quality standards by relevant government bodies.
The communiqué also stated that stakeholders agreed to create petroleum product and natural gas trading hubs in Nigeria and the convening of an annual conference on the West African Refined Fuel Market.
“We are encouraged at the successes of this inaugural event and look forward not only to pursuing its long-term goals but also to welcoming participation of others that share in the future of Africa and the development of its markets,” said the NMDPRA Chief Executive, Farouk Ahmed.
The Head of Market Reporting and Trading Solutions, S&P Global Commodity, Vera Blei, said, “We are proud to have participated in this event and offered insight into these important dialogues.”
Both NMDPRA and Platts said they look towards long-term sustainability and development of regional petroleum product reference prices and market development in Africa.
It was stated that the inaugural conference focused on several key objectives, like achieving the enhancement of petroleum products and natural gas pricing and quality standardisation reflective of West African market fundamentals and the improvement of market and data transparency within the region.
This also included achieving growth of seamless trading of petroleum products in the region; establishing additional storage and supply infrastructures to accommodate the growing volumes of trading activities; and accelerating downstream investments through various trade zones and digital market platforms while improving supply chain visibility and energy security across the region and beyond.
Central to the conference’s many outcomes were the collectively recognised benefits and needs for a viable Reference Trading and Price Hub for the West African market, contingent upon coordination across key interdependent pillars, including building and maintenance of refinery capacity and supply capabilities.