“Only a contestable market can shield Nigeria from Middle East oil shocks’ — Nwakwue
In a stark warning that cuts to the heart of Nigeria’s fragile energy stability, energy expert Joe Nwakwue has urged the country to embrace a fully “contestable market” in its downstream petroleum sector—or risk being dangerously exposed to global shocks driven by Middle East tensions.
Speaking during a high-level webinar hosted by the Major Energy Marketers Association of Nigeria (MEMAN) in collaboration with S&P Global, Nwakwue, a Partner at Zera Advisory and Consulting, delivered a compelling case for maintaining open import channels for petroleum products as a strategic safeguard against supply disruptions and price volatility.
At a time when geopolitical instability continues to rattle global oil markets, he argued that Nigeria cannot afford to concentrate its supply sources.
Instead, he called for a competitive market structure backed by strong regulation, clear policy direction, and access to multiple supply streams—conditions he described as essential for protecting consumers and sustaining economic resilience.
“Nigeria is not insulated from global price shocks,” Nwakwue warned, noting that the country’s Bonny Light crude remains tied to Brent benchmarks.
“Whatever happens to Brent inevitably shapes how Nigerian crude is priced in the international market.”
Against the backdrop of escalating Middle East tensions, he pointed to innovative mechanisms such as the naira-for-crude initiative as potential buffers, capable of offering pricing relief and shielding domestic refining from the turbulence of international markets.
Yet, beyond global pressures, Nwakwue identified regulatory uncertainty—not supply shortages—as the more immediate threat.
“We do not have an importation problem; we have a clarity problem,” he said, stressing that consistent and transparent policies are critical to investor confidence and market stability.
He underscored that sustaining importation is not a weakness but a necessity—one that forces dominant players to operate competitively, ensuring efficiency and fair pricing across the sector.
But the stakes, he warned, extend far beyond the oil industry.
With petrol prices already under pressure, Nwakwue painted a sobering picture: a surge to ₦2,000 per litre could trigger a sharp inflationary spiral, eroding recent economic gains and deepening hardship across the country.
Rather than a return to the widely criticized fuel subsidy regime, he called for smarter, targeted interventions.
These include setting clear price thresholds and deploying temporary measures designed to stabilise the market without distorting it.
“There are more effective tools than subsidies,” he said, advocating for time-bound strategies with defined entry and exit frameworks to prevent long-term fiscal burdens.
He also highlighted a critical but often overlooked risk: diesel dependency.
With nearly 60 percent of Nigeria’s industrial and alternative power generation relying on diesel, any sustained price increase could cripple manufacturing and stall economic activity.
“The government must act decisively to ensure industries do not grind to a halt under the weight of rising energy costs,” he cautioned.
As Nigeria navigates an increasingly uncertain global energy landscape, Nwakwue’s message is clear and urgent: resilience will not come from isolation, but from competition, clarity, and carefully calibrated intervention.
