The Nigerian National Petroleum Company (NNPC) Limited has agreed to forgo its petrol retail profit margin and sell the product at cost for 30 days as part of measures by the Federal Government to cushion the impact of rising global crude oil prices on Nigerians.
Under the arrangement, NNPC Retail will sell petrol at its landing cost, particularly to commercial transport operators. For instance, where the company’s landing cost is N1,300 per litre, it will sell at the same price.
The measure was announced on Thursday by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who said the initiative was backed by President Bola Ahmed Tinubu.
Oyedele said NNPC Retail, which already sells petrol at one of the lowest prices in the market, would implement the arrangement for 30 days, expressing hope that other marketers would follow suit.
He stressed, however, that the measure should not be interpreted as a return to petrol subsidy, which was removed by the Federal Government in May 2023.
The minister also announced plans for forward sales of crude oil to domestic refineries. He said the arrangement would help shield local petrol prices from international market volatility as domestic crude production increases and previously committed crude becomes available.
The Federal Government is also negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol to moderate sharp price fluctuations.
Under the proposed arrangement, where costs rise above the ceiling, refiners and importers would absorb the difference and recover it later when crude prices or the exchange rate improve.
Oyedele said the measure was designed to smoothen price movements rather than suppress prices, adding that the ceiling would be reviewed monthly and the figures published for transparency.
“This is neither a subsidy nor a price control,” he said, explaining that reducing volatility would provide greater certainty for households and businesses.
The government also announced increased funding for cash transfers to vulnerable households and subsidised credit for small businesses and consumers.
As part of efforts to reduce transportation costs, the Federal Government said it was accelerating the rollout of Compressed Natural Gas (CNG), which it said was 60 to 70 per cent cheaper than petrol.
It expects transport operators to pass the savings on to commuters through lower fares.
The government also plans to consider an excess-profit tax on operators found to be taking undue advantage of consumers along the energy value chain. Proceeds from such taxes, it said, would be used to fund transport support or vouchers for urban minimum-wage earners.
The government will also work with the National Assembly to consider additional tax relief for low-income earners under the 2027 Finance Bill.
Other measures include reducing regulatory costs that contribute to higher prices, improving traffic management in major urban centres to reduce fuel consumption and using NIPOST’s newly launched address codes to improve logistics efficiency.
The Federal Government further announced plans to establish a National Strategic Fuel Reserve to protect households and businesses against future supply disruptions and global energy shocks.
According to the government, refined products from the reserve would be released into the market under clear and published rules whenever disruptions or hoarding threaten supply and price stability.
The Presidency said the measures were intended to cushion Nigerians from the immediate impact of higher fuel prices without reversing the petrol subsidy removal.
It acknowledged that subsidy removal had imposed costs on Nigerians but argued that returning to the old system would recreate problems including fuel scarcity, smuggling, currency pressures and fiscal instability.
“Government is not out to reverse a necessary reform designed to set our country on the path towards sustained prosperity,” said the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
He said the government’s focus was to ensure that the gains of the reforms reached more Nigerians “faster and in more tangible ways.”
Onanuga also disclosed that the Federal Government was working on a comprehensive package of fiscal measures aimed at bringing inflation down to single digits sustainably in the near term.