LCCI urges strategic market stabilisation over price suppression as fuel costs surge

KEY POINTS

• The Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to prioritize strategic market stabilisation over administrative price suppression to manage rising fuel costs.
• Director-General Dr. Chinyere Almona noted that global crude prices hitting $112 per barrel and the Dangote Refinery gantry price reaching ₦1,245 per litre are driving severe inflationary shocks.
• Nigeria’s daily petrol demand of 50–53 million litres continues to outpace domestic refining capacity, creating a structural supply deficit.
• The Chamber called for the urgent enforcement of Domestic Crude Supply Obligations, ensuring at least 300,000 barrels per day are allocated to local refineries in Naira.

MAIN STORY

The Lagos Chamber of Commerce and Industry (LCCI) has warned that Nigeria’s current fuel affordability crisis is a structural issue that cannot be solved by “price suppression” or “administrative controls.”

 In a statement released on Tuesday, Dr. Chinyere Almona pointed out that the recent spike in global crude oil and the upward review of refinery gantry prices are transmitting massive cost-push inflation into transportation, agriculture, and industrial production.

She argued that while higher oil prices usually offer a fiscal upside for Nigeria, these benefits are currently being eroded by production limitations and high energy costs.

To mitigate these shocks, the LCCI is advocating for a shift toward “strategic market stabilisation.” This includes providing targeted, time-bound support for SMEs and the transport sector while avoiding the return of inefficient blanket subsidies.

Central to this strategy is the stabilization of the Naira and the rigorous enforcement of the Petroleum Industry Act (PIA), which mandates that a significant portion of Nigeria’s crude production be sold to local refineries like Dangote and various modular units to reduce foreign exchange exposure and lower logistics costs.

THE ISSUE

The primary conflict is the “Deregulated Pricing vs. Purchasing Power” dilemma. While the government has moved toward a deregulated market, the “Exchange-Rate Pass-Through” means that any fluctuation in the Naira or global oil prices immediately hits the Nigerian consumer.

 The LCCI identifies a “Concentration Risk” where the market relies too heavily on a single major refiner. To resolve this, the Chamber is pushing for the rapid operationalisation of licensed modular refineries and a rules-based pricing framework by the NMDPRA that prevents the abuse of market dominance without returning to the era of price caps.

WHAT’S BEING SAID

• “Government intervention must be anchored on strategic market stabilisation rather than price suppression,” stated Dr. Chinyere Almona, DG of LCCI.
• “Nigeria’s daily petrol demand of over 50–53 million litres continues to outpace effective domestic refining capacity,” Almona noted regarding the supply gap.
• “The Federal Government and NNPCL must urgently enforce domestic crude supply obligations… ensuring allocation of more than 300,000 barrels per day to local refineries,” she added.
• “Energy costs will continue to erode business margins and dampen economic expansion, reinforcing broader macroeconomic vulnerabilities,” the LCCI DG concluded.

WHAT’S NEXT

• The NMDPRA is expected to come under pressure to implement a more transparent, rules-based pricing framework that reflects verifiable costs.
• Analysts are looking for a more scalable “Naira-for-crude” framework to be finalized between the NNPCL and local refiners to stabilize domestic output.
• The government may accelerate licensing and support for modular refineries to diversify the supply base and reduce concentration risk.
• The Chamber will likely continue to push for policy coordination between the CBN and fiscal authorities to improve FX liquidity, which is critical for fuel price moderation.

BOTTOM LINE

The Bottom Line is that cheap fuel in Nigeria is a “Supply” problem, not a “Price” problem. By calling for the enforcement of crude supply obligations and a move away from “blanket subsidies,” the LCCI is telling the government that the only way to lower prices is to increase local refining competition and stabilize the Naira. Until the 53-million-liter daily gap is closed by domestic production, the Nigerian economy will remain at the mercy of global oil volatility.

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