Two core issues affect the downstream petroleum sector in Nigeria.
The first is our lack of refining capacity and the second is the government’s petrol price control. Essentially, supply and pricing.
Undoubtedly, the most important one is the petrol price control because better refineries would not solve our downstream petrol issues.
Nigeria’s petrol price control has two dimensions. First, there’s a price cap—the government pays the difference between the cap and the market price, calling this difference the petrol subsidy.
The second element is the price regulation itself as the government sets the price for petrol, not the market.
This distinction is important because the government could increase the price cap from the current ₦165/litre to say ₦300/litre, closer to the market price. However, this would still be a form of price control because the government would determine the price rather than market forces.
We need deregulation, where government influence over the industry is reduced. Today, we’ll explore why and what a deregulated petrol price would look like.
We already know how the petrol