138 rules and the test of Nigeria’s oil reform

Nigeria’s downstream petroleum market is entering a stage where the quality of regulation may matter as much as the quantity of investment flowing into it.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has proposed 138 regulations across 23 parts to tackle anti-competitive practices in the midstream and downstream petroleum sectors. The proposed Midstream and Downstream Petroleum Prevention of Anticompetitive Practices and Behaviour Regulations, 2026, are being developed under Section 216 of the Petroleum Industry Act (PIA) 2021 and are intended to translate the Act’s competition provisions into detailed and enforceable rules.

The breadth of the proposed framework is significant. It covers price-fixing, collusion, market allocation, bid-rigging, coordinated supply restrictions, abuse of dominant positions, access to pipelines, storage terminals, depots and other essential infrastructure. It also extends into mergers and acquisitions, vertical integration, digital markets, enforcement, penalties and coordination between regulatory agencies. That range reflects the complexity of the petroleum market Nigeria is trying to build.

For decades, the country’s fuel market operated within a system heavily shaped by state intervention, regulated prices, foreign exchange constraints, import dependence and a dominant national oil company. The removal of petrol subsidies and the gradual emergence of domestic refining capacity have altered that structure considerably. The market now requires rules capable of governing competition between refiners, importers, depot operators, marketers and other participants without allowing economic power to become a substitute for regulation. This is where the NMDPRA proposal deserves serious attention.

A liberalised market cannot be judged simply by the number of companies operating in it. Competition becomes meaningful when consumers can benefit from competing prices and services, new businesses can enter the market, essential infrastructure is accessible on fair terms and powerful operators cannot use their position to exclude rivals.

The proposed regulations recognise this problem. They would require operators providing essential midstream and downstream services to provide open and non-discriminatory access to infrastructure, while greater transparency would be required around tariffs, fees, capacity and service conditions. The draft also seeks to prevent undisclosed preferential arrangements and coordinated conduct that could distort competition.

Such provisions are particularly important because infrastructure remains a powerful source of market influence. A petroleum company may have the capacity to produce or import fuel, yet its ability to reach consumers can still depend on access to storage, terminals, pipelines, depots and distribution networks. If access to those facilities can be restricted selectively, competition can be weakened regardless of how open the market appears on paper. The same principle applies to pricing.

The proposed rules would prohibit coordination among competitors over pump prices, ex-depot prices, margins, discounts, freight charges, supply levels, territories, customers and tender submissions. They also contemplate scrutiny of practices such as exclusive supply agreements, long-term contracts, take-or-pay arrangements, loyalty rebates and other commercial arrangements where they could substantially restrict competition.

This matters because Nigerians ultimately experience petroleum-market regulation at the point of purchase. They experience it through the price displayed at a filling station, the availability of petrol, the cost of transportation and the price of goods whose distribution depends on fuel.

The regulatory debate therefore cannot become an industry conversation conducted solely between government agencies and petroleum companies. The consumer has a direct stake in whether the new framework works. At the same time, regulation must avoid becoming so cumbersome that it discourages the investment Nigeria urgently needs.

Some industry stakeholders have already raised concerns about aspects of the draft, including the treatment of long-term commercial arrangements. Their argument is that capital-intensive petroleum projects often require sufficiently long contracts to provide investors with the confidence needed to commit substantial funds. That concern deserves proper consideration during the consultation process.

Nigeria needs competition, yet it also needs investment. It needs consumer protection, while ensuring that companies have sufficient certainty to build refineries, storage facilities, pipelines and other infrastructure. The final rules should therefore distinguish carefully between commercial arrangements that genuinely restrict competition and those that simply provide the contractual certainty required for major investment.

The proposed regulations also bring the relationship between the NMDPRA and the Federal Competition and Consumer Protection Commission into sharper focus. The NMDPRA has signed a memorandum of understanding with the FCCPC to strengthen coordination in competition regulation within the petroleum sector.

That cooperation is welcome, because overlapping regulatory mandates can create confusion just as easily as they can create stronger oversight. Businesses need to know which agency has responsibility for what, while consumers need an enforcement system that does not allow disputes to disappear into institutional gaps.

The authorities must therefore make inter-agency coordination a practical mechanism rather than another item in a regulatory document. There is also a broader question about enforcement.

Nigeria has never suffered from a shortage of laws and regulations. The recurring difficulty has been translating rules into consistent action. A sophisticated competition framework will mean little if violations are difficult to detect, investigations take too long, penalties are inconsistently applied or politically influential operators can escape meaningful scrutiny. This is why the proposed 138 regulations should be judged by what happens after they are gazetted.

NMDPRA must have the technical capacity to investigate market behaviour, analyse pricing patterns, monitor infrastructure access and identify coordinated conduct. It must also have the institutional independence and transparency required to enforce the rules consistently across large and small operators.

The public should be able to see how complaints are handled, how breaches are established and what sanctions follow proven violations. Regulatory credibility grows when enforcement is predictable. The timing makes this particularly important.

The NMDPRA has also approved petrol import permits covering about 830,000 metric tonnes for several marketers for the fourth quarter of 2026, saying the measure is intended to prevent supply gaps during the year-end period. The development comes as competition and pricing remain major issues in the downstream market.

This illustrates the complicated transition Nigeria is navigating. Domestic refining capacity is expanding, especially with the Dangote refinery, yet the regulator still has to manage imports to safeguard supply. Competition between domestic refiners and importers therefore needs to be governed by transparent rules that protect supply security while allowing efficient operators to compete.

The ultimate objective should be straightforward: a petroleum market in which efficiency, investment and service determine commercial success, rather than privileged access, collusion or control of essential infrastructure.

The NMDPRA has done the right thing by opening the proposed regulations to stakeholder scrutiny. Its chief executive, Rabiu Umar, has described the process as a genuine consultation in which the Authority intends to listen to industry participants and improve the draft where necessary. That consultation should be substantive.

Industry operators should scrutinise provisions that could create unintended consequences. Consumer groups should examine whether the proposed safeguards are sufficiently strong. Competition authorities should test the framework against international experience and Nigeria’s own market realities. Regulators should be prepared to amend provisions where evidence shows that they could restrict investment or create regulatory uncertainty. Above all, the final regulations must be enforceable.

Nigeria has already taken the politically difficult step of restructuring its downstream petroleum market. The next challenge is institutional. A deregulated market without effective competition can leave consumers exposed to powerful market participants. Regulation without enforcement can produce the appearance of oversight while allowing old practices to survive under new arrangements. The 138 proposed rules offer an opportunity to close that gap.

The measure of success will eventually be seen in the market itself: more transparent pricing, fairer access to infrastructure, genuine opportunities for new entrants, sustained investment and, ultimately, a petroleum sector in which Nigerians can see the benefits of competition in the prices they pay and the services they receive. The reform has entered a new phase. The hard work now is making the rules work.