NMDPRA’s new competition framework aligns with international best practices

By Onu Okorie

Nigerian Midstream and Downstream Petroleum Regulatory Authority NMDPRA has announced that a new regulation will align Nigeria’s midstream and downstream petroleum sectors’ competition regime with international best practices, while creating a competitive environment that attracts investment and innovation across the oil and gas value chain.

The proposed framework, published on the NMDPRA website, seeks to ensure a level playing ground for all market participants and prevent practices that may prevent, restrict, or distort competition. It also aims to protect consumer interests by preventing collusive price-fixing, market allocation, or other manipulative practices that could lead to higher prices or reduced supply.

According to the Authority, the regulation will ensure fair competition among participants and prevent any individual or group from abusing a dominant position or creating an unhealthy monopoly in the supply chain.

“The objectives of these Regulations are to: implement a comprehensive competition framework for the midstream and downstream petroleum sectors in Nigeria, ensuring a level playing field for all market participants and preventing practices that may prevent, restrict, or distort competition,” part of the proposed regulation read. It further stated that the framework would “ensure open and non-discriminatory access to essential midstream infrastructure (pipelines, depots, storage, terminals) for all qualified operators, thereby fostering efficient use of assets and entry of new participants.”

The regulation will apply broadly across the sector. “These Regulations apply to all midstream and downstream petroleum operations in Nigeria, including but not limited to: transportation of crude oil and petroleum products through pipelines, storage and terminal operations, wholesale supply of petroleum liquids and natural gas, retail distribution of fuels, petrochemical production, and any related commercial activities licensed under the Petroleum Industry Act,” the document stated, adding that it would bind all holders of licences, permits, authorisations or approvals issued by the Authority, as well as affiliates and industry associations whose activities affect competition in the sector.

Under the proposed rules, no licensee, operator, or participant in the sector will be allowed to engage in any conduct, arrangement, agreement, understanding, decision, or practice that has the object or effect of preventing, restricting, or distorting competition in any part of the market. Where conduct appears likely to substantially lessen competition, the burden will fall on the licensee to demonstrate legitimate efficiency gains or pro-competitive benefits.

The regulation also spells out consequences for non-compliance. “Any failure to comply with the requirements under this Regulation shall constitute a breach of licence conditions and may result in regulatory sanctions, including administrative penalties, licence suspension, or revocation, in accordance with Parts XVI and XVII of these Regulations,” it stated.

The Authority emphasised that every licensee or permit holder operating in the sector must conduct its business in a manner that promotes effective competition, supports market entry, and avoids conduct or practices that lead to or reinforce monopoly, dominance, or exclusionary outcomes.

Licensees may also be required to incorporate competition compliance clauses into corporate governance policies and third-party contracts, and to implement internal audits, legal reviews, and compliance monitoring for competition obligations. Other requirements include specific provisions in third-party contracts — such as access agreements, supply arrangements, and infrastructure service contracts — to ensure adherence to the Competition Regulations and prevent anti-competitive terms or effects, as well as the maintenance of operational separation between monopoly facilities and competitive activities.