The Federal Government has commenced negotiations to cap the landing cost of petrol at ₦1,350 per litre as part of measures to cushion Nigerians against rising global fuel prices and stabilise the domestic market.
The government also announced that the Nigerian National Petroleum Company (NNPC) Retail would forgo its petrol retail profit margin and sell the product at cost for 30 days to ease the burden on households and businesses.
The measures were announced by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, according to a statement issued on Thursday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
The statement said the NNPC Retail initiative, backed by President Bola Tinubu, was designed to cushion the impact of global crude oil price shocks and volatility, particularly on vulnerable households and commercial transport operators.
Under the arrangement, NNPC Retail would sell petrol at its landing cost without adding a retail profit margin for 30 days.
The statement explained that if the company’s landing cost stood at ₦1,300 per litre, it would sell the product at the same price.
Oyedele expressed hope that other fuel marketers would follow the company’s example, noting that the sharp increase in global crude oil and petrol prices was not expected to last long.
He, however, warned against interpreting the initiative as a return to the petrol subsidy regime, which the Federal Government abolished on May 29, 2023.
As part of efforts to moderate fuel price fluctuations, the government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol.
Under the proposed arrangement, refiners and importers would absorb costs exceeding the ceiling and recover the shortfall later when crude oil prices or exchange rates became more favourable.
Oyedele said the arrangement was intended to moderate price fluctuations rather than impose price controls or reinstate subsidies.
“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them,” he said.
Explaining the rationale behind the proposal, the minister said maintaining relatively stable prices would help households and businesses plan their expenses and reduce the uncertainty associated with sudden price changes.
“The reasoning is simple. 1,400 naira a litre today and 1,400 tomorrow is better than 1,500 today and 1,300 tomorrow, because volatility itself adds to uncertainty and cost,” he said.
He added, “And when fares rise sharply, they rarely fall as fast.”
According to Oyedele, the proposed ceiling would not be permanent, as the government planned to review it monthly and adjust it according to prevailing costs.
“The ceiling will be reviewed monthly, reset as costs require, and the figures published for transparency,” he said.
The Federal Government is also introducing forward sales of crude oil to domestic refineries to reduce the exposure of local fuel prices to fluctuations in the international market.
The statement said increased domestic crude oil production and the release of previously committed crude volumes were expected to support the arrangement and help protect consumers from global market volatility.
Other measures include increased funding for cash transfers to vulnerable households and subsidised credit for small businesses and consumers.
The government is also accelerating the deployment of compressed natural gas (CNG) in collaboration with state governments to reduce transportation costs.
According to the statement, CNG is between 60 and 70 per cent cheaper than petrol, with the government expecting transport operators to pass the savings on to passengers through lower fares.
The government also plans to consider an excess-profit tax on operators found to be taking undue advantage of consumers across the energy value chain.
The proceeds, according to the statement, would be used exclusively to cushion the impact of rising fuel prices through transport support or vouchers for urban minimum-wage earners.
The Federal Government will also work with the National Assembly to consider additional tax relief for low-income earners under the 2027 Finance Bill.
Onanuga said the administration was collaborating with state governments and security agencies to curb the collection of road taxes and levies that contribute to higher transport fares and logistics costs.
The government is also working to reduce regulatory costs that increase the cost of doing business and, indirectly, the prices of goods and services.
Another measure is the proposed establishment of a National Strategic Fuel Reserve to protect households and businesses against future energy supply disruptions.
Under the plan, refined petroleum products would be released into the market under clearly defined and publicly available rules whenever global disruptions or hoarding threatened supply and price stability.
The Presidency said the reserve would help prevent artificial scarcity, discourage market manipulation and strengthen Nigeria’s long-term energy security.
It stressed that the initiative would not involve fixing prices or restoring petrol subsidies but would help ensure that a deregulated market could withstand sudden disruptions.
Addressing the hardship Nigerians face over rising fuel prices, the Presidency acknowledged the difficulties associated with the removal of the petrol subsidy but maintained that returning to the former system would create greater economic challenges.
“Removing the fuel subsidy came at a price. But the alternative has been tried. Nigeria has already lived through that cycle: scarcity, smuggling, a collapsing currency and a fiscal crisis,” the statement said.
The Presidency added, “We cannot afford to live through it again, least of all in response to a temporary disruption, and at the very moment the results of reform are gathering pace.”
It maintained that the government’s objective was not to reverse the subsidy removal policy but to ensure that Nigerians benefited more directly from ongoing economic reforms.
“Government is not out to reverse a necessary reform designed to set our country on the path towards sustained prosperity. It is to ensure its gains reach more Nigerians, faster and in more tangible ways. That is our work, and we are committed to doing it,” the statement said.
The Federal Government also disclosed that it was working on a comprehensive package of fiscal measures aimed at sustainably reducing inflation to single digits in the near term.