By Seun Ibiyemi
The Federal Government has unveiled a fresh package of measures to cushion Nigerians against rising petrol prices, including a proposed N1,350-per-litre ceiling on petrol landing costs and a decision by the Nigerian National Petroleum Company Limited (NNPC) to forgo its retail profit margin for 30 days.
The measures, announced by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, are aimed at moderating the impact of global crude oil price volatility on households, transport operators and businesses without reinstating the petrol subsidy regime.
Under the arrangement, NNPC Retail will sell petrol at cost for the next 30 days, meaning the company will not add its retail profit margin to the landing cost of the product.
For instance, where the landing cost is N1,300 per litre, the company will sell at the same price, with commercial transport operators among the intended beneficiaries of the intervention.
The decision, backed by President Bola Ahmed Tinubu, is also expected to encourage other fuel marketers to adopt similar measures to ease the pressure on consumers.
Oyedele, however, stressed that the initiative should not be mistaken for a restoration of the petrol subsidy, which was removed on May 29, 2023.
A major component of the government’s intervention is the proposed ceiling of N1,350 per litre on petrol’s ex-gantry or landing cost.
Under the proposed mechanism, refiners and importers would initially absorb costs exceeding the ceiling and recover the difference later when crude oil prices or exchange rate conditions become more favourable.
Oyedele said the arrangement was designed to smooth out price fluctuations rather than suppress prices through subsidies or direct price controls.
“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them,” he said.
He explained that more predictable fuel prices would help households and businesses plan their spending, particularly as increases in transport fares often persist even after petrol prices decline.
The proposed ceiling would be reviewed monthly, with adjustments made as necessary and the relevant figures published to promote transparency.
The Federal Government is also introducing forward sales of crude oil to domestic refineries to improve feedstock availability and reduce the exposure of local fuel prices to global market volatility.
Oyedele said rising domestic crude production and the release of previously committed volumes were expected to support the initiative.
The measure is intended to strengthen domestic refining and improve the availability of petroleum products while reducing the impact of sudden international price movements on the Nigerian market.
Beyond petrol pricing, the government is expanding compressed natural gas (CNG) deployment in collaboration with state governments as part of efforts to lower transportation costs.
According to Oyedele, CNG is between 60 and 70 per cent cheaper than petrol, with transport operators expected to pass the savings on to passengers through reduced fares.
The government is also increasing funding for cash transfers to vulnerable households and subsidised credit for small businesses and consumers.
It is further working with state governments and security agencies to curb road taxes and levies that increase transportation fares and logistics costs.
The administration also plans to consider additional tax relief for low-income earners under the 2027 Finance Bill.
The government is considering an excess profit tax for operators found to be exploiting consumers across the energy value chain.
Oyedele said revenue from taxes imposed on price gouging would be dedicated to interventions designed to cushion the impact of high fuel prices, including transport support and vouchers for urban minimum-wage earners.
The Federal Government is also working to reduce regulatory costs that contribute to higher business expenses and the prices of goods and services.
Another measure is the planned establishment of a National Strategic Fuel Reserve to protect households and businesses against future energy supply disruptions.
Under the proposal, refined petroleum products would be released into the market under published rules whenever global disruptions or hoarding threaten supply and price stability.
The government said the reserve would help prevent artificial scarcity, discourage market manipulation and reduce sudden price shocks without fixing prices or restoring a blanket subsidy.
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Traffic management improvements in major cities are also planned to reduce fuel consumption caused by congestion, while NIPOST’s newly launched address codes are expected to improve logistics efficiency and lower delivery costs.
The Presidency acknowledged the hardship Nigerians face because of high fuel prices but maintained that returning to a blanket subsidy would expose the country to renewed fiscal and economic pressures.
In a statement issued on Thursday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the government argued that the previous subsidy regime had been associated with fuel scarcity, smuggling, currency pressures and fiscal instability.
The Presidency said the objective of the new measures was to ensure that the benefits of economic reforms reached more Nigerians without reversing subsidy removal.
It also disclosed that the Federal Government was working on a broader package of fiscal measures aimed at sustainably reducing inflation to single digits in the near term.
The success of the interventions will depend on their implementation, cooperation from refiners and marketers, and whether lower supply and operating costs translate into reduced prices and transport fares for consumers.
