How Subsidy Removal Increased Gas Market Competition – NMDPRA
By Stephanie Odiase
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), says the removal of petrol subsidy has led to increased competition in the gas market, benefiting the nation as companies strive to gain market share.
Authority Chief Executive (ACE), Engr. Farouk Ahmed, who stated this in his office in Abuja, explained that the removal of petrol subsidy has triggered a robust gas market competition in Nigeria translating to increased products and revenue for the country.
Ahmed also disclosed that about half of the existing 256 petroleum product depots in Nigeria, are currently in operation. “Regarding gas distribution and product depots, there are approximately 256 product depots, but only slightly over 50% of them are currently operational,” he said.
The NMDPRA chief further hinted that the agency is moving aggressively to deepen gas utilisation as an alternate source of energy through institutional reforms as demanded by the Petroleum Industry Act (PIA).
He explained that, “The NMDPRA oversees two main sections related to gas – the midstream and the downstream. The midstream encompasses the gas sector that the agency regulates, while the downstream focuses on the liquid side, including crude oil and its derivatives. Additionally, the agency plays a crucial role in enhancing access to primary energy fuels through an efficient transportation network and overseeing the pipeline network”.
He added that “The NMDPRA operates a network of pipelines that transport gas. In the past, the Nigerian National Petroleum Corporation Limited (NNPCL) managed a pipeline network spanning over 5,002 kilometres, connecting all the depots.”
Speaking on the volatility in the global oil market, and its effect on the Nigerian economy, he explained that the development is detrimental to the economy because the nation’s revenue inflow is negatively impacted.
According to Ahmed, the most concerning aspect of the market is the inconsistencies in President Trump’s pronouncements, which leaves investors and traders in the oil and gas industry uncertain about the future.
He said: “The global oil market, and indeed the global economy, has experienced volatility due to the new American government’s policy of tariffs, which are not only targeted at China, but also countries worldwide.
“Of course, in terms of product pricing, consumers of crude oil derivatives are delighted because the price is decreasing. However, when we consider the nation as a whole, this is detrimental to our economy because our revenue inflow is negatively impacted.”
The Authority Chief Executive stressed that Nigeria’s revenue inflow is further compounded by the issues of vandalism, illegal bunkering, and low production.
On the relationship between the NMDPRA, Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Corporation Limited (NNPCL), Engr. Ahmed clarified that both the NUPRC and NMDPRA supervise and regulate the activities of the NNPCL.
He explained that there’s a lot of misunderstanding about the relationship between the NNPCL, NMDPRA, and NUPRC, noting that many people believe that NMDPRA and NUPRC are under NNPCL.
Ahmed stated that while the NNPCL is a commercial arm of the government, the NUPRC is the technical and commercial regulator of upstream operations, and the NMDPRA is the technical and commercial regulator of the mid and downstream sectors.
In essence, he said the NMDPRA regulates the mid and downstream sectors, which include refineries, gas processing plants, petrochemicals, LNG, floating LNG, CNG, LPG, lubricant plants, processing plants, pipelines, barges that transport petroleum products, imports of petroleum products, product depots, trucks and industries that distribute petroleum products, as well as retail outlets.
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