There is a significant information gap between industry stakeholders and the public, which has influenced much of the ongoing discussion. The following perspective is intended to help place the issue in its proper context.
Rationale for the Price Floor
An estimated 15% of total downstream petroleum volumes (approximately 1 billion litres) is handled by non-compliant and suspect Oil Marketing Companies (OMCs) that evade taxes and other statutory obligations. These operators are able to sell petroleum products at unsustainably low prices, creating unfair competition, undermining compliant businesses, and depriving the state of critical revenue.
The introduction of a price floor is intended to protect the downstream petroleum sector and the wider economy from these distortions. However, while it may offer temporary relief, it does not address the root cause of the problem, the continued presence of non-compliant operators within the market. A more sustainable solution would require a deliberate regulatory focus on cleaning up the sector, strengthening enforcement, and removing rogue entities. Achieving this would naturally eliminate the need for price controls.
Competitive Pricing and Market Sustainability
Contrary to some public perceptions, competitive pricing in the downstream petroleum sector is to be encouraged. Well-managed and compliant operators have demonstrated, over many years, that it is possible to offer competitive prices while maintaining quality, quantity assurance, and full regulatory compliance. Healthy competition, when grounded in compliance and transparency, ultimately benefits consumers and supports long-term industry sustainability.
Reframing the Discourse
The central issue, therefore, should not be whether a price floor exists or not. Compliant and efficient operators will continue to compete responsibly in the market under either scenario. The more critical national priority is a comprehensive clean-up of the downstream petroleum industry; one that ensures a level playing field, protects consumers, safeguards government revenue, and promotes a sustainable and credible petroleum supply system.
Authored by IMANI’s Industry Friends who like to do the right things, such as Zen and Star Oil etc..
