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 to cushion the impact of rising global crude oil prices on Nigerian households.
The Federal Government said the measure, backed by President Bola Tinubu, forms part of a broader package of interventions to ease the burden of rising fuel prices, transport fares and living costs on vulnerable Nigerians.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced the measures on Thursday, October 8, according to a statement issued by the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
Under the arrangement, NNPC Retail will sell petrol at its landing cost without adding a retail profit margin. For instance, if the company’s landing cost is ₦1,300 per litre, it will sell at the same price, with commercial transport operators among those expected to benefit.
Oyedele, who noted that NNPC Retail already sells petrol at relatively competitive prices, expressed hope that other marketers would adopt similar measures, adding that the current surge in crude oil and petrol prices was not expected to last long.
He, however, cautioned against interpreting the initiative as a return to the petrol subsidy regime, which ended on May 29, 2023.
As part of the measures to moderate pump prices, the Federal Government is also negotiating a ceiling of ₦1,350 per litre on petrol’s ex-gantry or landing cost.
Under the proposed arrangement, refiners and importers would absorb costs above the ceiling and recover the shortfall later when crude oil prices or the exchange rate become more favourable.
Oyedele said the arrangement was neither a subsidy nor price control but a mechanism to moderate fluctuations in petrol prices over time.
He explained that maintaining more stable prices would provide greater certainty for households and businesses than allowing sharp increases followed by sudden reductions, noting that transport fares often rise quickly but do not fall at the same pace.
According to him, the proposed ceiling would be reviewed monthly and adjusted in line with prevailing costs, with the figures published to ensure transparency.
The government also plans to introduce forward crude oil sales to domestic refineries. As crude production increases and previously committed supplies become available, the arrangement is expected to help shield domestic petrol prices from global market volatility.
FG targets transport costs, vulnerable households
The Federal Government is also working 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 initiative will be implemented under the 2025 tax reform laws.
In addition, the government plans to increase funding for cash transfers to vulnerable households and expand access to subsidised credit for small businesses and consumers.
It is also accelerating the deployment of compressed natural gas (CNG) in collaboration with state governments, with transport operators expected to pass the savings on to passengers through lower fares.
The government estimates that CNG is 60 to 70 per cent cheaper than petrol.
Another proposed intervention is an excess profit tax targeting operators found to be taking undue advantage of consumers across the energy value chain.
Oyedele said proceeds from taxes imposed on excessive profiteering would be used exclusively to cushion the impact of 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.
Other planned measures include reducing regulatory costs that contribute to the cost of doing business and, ultimately, the prices of goods and services.
FG plans strategic fuel reserve
The government is also investing in a National Strategic Fuel Reserve to protect households and businesses against future energy supply disruptions.
Under the proposed framework, refined petroleum products would be released into the market under clearly defined and published rules whenever global disruptions or hoarding threaten supply and price stability.
According to the government, the reserve would help prevent artificial scarcity, discourage market manipulation and reduce price volatility without reintroducing subsidies or fixing prices.
The government further plans to improve traffic and logistics management, particularly in major urban centres, to reduce fuel consumption and transportation costs.
The use of address codes recently introduced by the Nigerian Postal Service (NIPOST) is also expected to improve logistics efficiency and lower delivery costs.
Presidency rules out return to blanket subsidy
The Presidency acknowledged the pressure that high petrol prices have placed on Nigerians but maintained that restoring a blanket subsidy would expose the economy to longer-term risks.
It recalled that the previous subsidy regime had been associated with fuel scarcity, smuggling, currency pressures and fiscal challenges.
The government said the current interventions were designed to provide targeted relief without reversing the subsidy removal policy.
“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 Presidency added that the Federal Government was working on a comprehensive package of fiscal measures aimed at sustainably reducing inflation to single digits in the near term.
