Nigeria’s Downstream Petroleum Industry Supply Chain and Distribution Network and the Implications on Pump Prices

Abstract

This study analyses Nigeria’s downstream petroleum industry supply and distribution network and examines its implications for Premium Motor Spirit (PMS) pump prices across the country’s six geopolitical zones and the Federal Capital Territory (FCT). Using a quantitative ex-post facto research design, the study employs secondary time-series data covering 2014–2023, sourced from the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources. Descriptive statistics, regression analysis, and trend (rate-of-change) analysis were applied to evaluate the relationship between PMS supply volumes and pump price variations. Findings reveal significant regional disparities in PMS distribution, with the South-South and South-West zones accounting for the largest average supply volumes. Empirical results show that pump price variations exhibit a weak but positive relationship with PMS supply in most regions, while a statistically significant relationship exists only in the South-West zone. Trend analysis indicates that the average rate of change in PMS supply across all regions is positive, confirming increasing supply trends despite rising pump prices. The results suggest that pump prices alone do not fully explain supply dynamics, as infrastructure constraints, logistics costs, and policy interventions play critical roles. The study concludes that Nigeria’s uniform pump pricing regime inadequately reflects regional distribution costs, contributing to economic distortions. Policy recommendations emphasize the need for empirically driven, region-sensitive petroleum pricing and supply strategies to enhance market efficiency, stabilize inflation, and support sustainable economic growth.