By Chesa Chesa
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 Federal Government measures to cushion the impact of rising global crude oil prices on Nigerian households.
The measure, backed by President Bola Tinubu, was announced on Thursday by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, alongside other interventions aimed at moderating fuel prices, reducing transport costs and supporting vulnerable households.
A press statement signed by Bayo Onanuga, Special Adviser to the President on Information and Strategy, on Thursday, explained that under the arrangement, NNPC Retail will sell petrol without adding its retail profit margin, meaning that if its landing cost is ₦1,300 per litre, the company will sell at the same price.
The government said the intervention was intended particularly to ease the burden on vulnerable households and commercial transport operators amid volatility in global crude oil and petrol prices.
Oyedele expressed hope that other fuel marketers would emulate NNPC, noting that the current surge in prices was not expected to last long.
He, however, cautioned against interpreting the initiative as a return to petrol subsidy, which was removed on May 29, 2023.
The minister also announced plans for forward sales of crude oil to domestic refineries. He said the arrangement, alongside increased production and the release of previously committed crude, was expected to shield domestic petrol prices from fluctuations in the international market.
Another measure under consideration is 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 exceeding the ceiling and recover the shortfall later when crude oil prices or exchange rates become more favourable.
Oyedele said the arrangement was neither a subsidy nor price control but a mechanism for smoothing out price fluctuations over time.
He explained that maintaining prices at a relatively stable level would provide greater certainty for households and businesses than allowing sharp increases followed by subsequent reductions.
The minister said the ceiling would be reviewed monthly, with adjustments made in line with prevailing costs and the figures published to ensure transparency.
The Federal Government also plans to enforce provisions of the 2025 tax reform laws, in collaboration with state governments and security agencies, to curb the collection of road taxes and levies that contribute to higher transport fares and logistics costs.
It is also increasing funding for cash transfers to vulnerable households and expanding access to subsidised credit for small businesses and consumers.
On alternative energy, the government said it was accelerating the deployment of compressed natural gas (CNG) vehicles in partnership with state governments.
Transport operators are expected to pass the savings from the transition to passengers through lower fares. According to the government, CNG is 60 to 70 per cent cheaper than petrol.
The government is also considering an excess-profit tax on operators found to be taking undue advantage of consumers across the energy value chain.
Proceeds from any such tax, it said, would be used exclusively to cushion the impact of higher fuel prices through transport support or vouchers for urban minimum-wage earners.
The Federal Government further plans to work with the National Assembly to consider enhanced tax relief for low-income earners under the 2027 Finance Bill.
Other measures include reducing regulatory costs that contribute to the cost of doing business and, indirectly, the prices of goods and services.
The government also announced plans to establish 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 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 price volatility without fixing prices or reintroducing fuel subsidies.
It added that traffic management agencies would improve traffic flow, particularly in major urban centres, to reduce fuel consumption. The newly introduced address codes by the Nigerian Postal Service (NIPOST) are also expected to improve logistics efficiency and lower delivery costs.
The Presidency acknowledged the hardship Nigerians were experiencing because of high fuel prices but maintained that restoring a blanket subsidy would expose the economy to longer-term risks.
It said the removal of the subsidy had come at a cost but argued that the previous system had been associated with fuel scarcity, smuggling, currency pressures and fiscal difficulties.
According to the Presidency, the latest interventions are intended to ensure that the benefits of economic reforms reach more Nigerians more quickly without reversing what it described as necessary reforms.
It also disclosed 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.
