“This is Not Fuel Subsidy": FG Moves to Reduce Petrol Cost, Announces New Pump Price
- The federal government is negotiating a petrol price ceiling of N1,350 per litre to reduce sudden price increases and make pump prices more stable
- The government plans to establish a strategic fuel reserve, expand CNG adoption and consider an excess profit tax on energy operators who exploit consumers
- The government also plans to use revenue from the proposed tax to provide transport support and vouchers for low-income workers
PAY ATTENTION: Find it fast with our new search feature at Legit.ng!
Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
The federal government is negotiating a price ceiling of N1,350 per litre for petrol at the ex-gantry or landing-cost level as part of measures to reduce sudden increases in pump prices.
Taiwo Oyedele, minister of finance, disclosed this on his verified X account, explaining that the proposed arrangement is intended to make fuel prices more predictable for households and businesses.
Source: UGC
According to Oyedele, the government plans to introduce a system known as price modulation, which would prevent petrol prices from responding immediately to every change in global crude oil prices or foreign exchange rates.
FG explains how N1,350 petrol price ceiling will work
Oyedele said the government was negotiating with industry operators to establish a maximum ex-gantry or landing cost.
“The government is negotiating a ceiling of 1,350 naira a litre on the ex-gantry or landing cost of petrol, to keep pump prices stable,” he said.
Under the proposed arrangement, refiners and importers would absorb costs exceeding the agreed ceiling and recover the difference later when crude oil prices or exchange rates become more favourable.
He explained that the plan was neither a fuel subsidy nor a form of price control but a mechanism to reduce fluctuations in petrol prices over time.
He said:
“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them. 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.”
The minister argued that maintaining a relatively stable price would be preferable to frequent increases and reductions, which create uncertainty for consumers and businesses.
He also noted that transport fares often rise sharply when fuel prices increase but do not fall at the same pace when fuel becomes cheaper.
Oyedele added that the proposed ceiling would be reviewed monthly, with adjustments made when necessary and the relevant figures published to promote transparency.
FG plans strategic fuel reserve to prevent scarcity
The minister also announced plans to establish a national strategic fuel reserve to protect the economy from future energy supply disruptions.
He said refined petroleum products would be released into the market according to clearly defined and publicly available rules whenever global disruptions or hoarding threatened supply and price stability.
According to Oyedele, the reserve would help prevent artificial scarcity, discourage market manipulation and strengthen Nigeria's long-term energy security.
He stressed that the initiative would not involve subsidising fuel or fixing pump prices but would help reduce sudden market shocks.
The government is also working with state governments to accelerate the deployment of compressed natural gas (CNG) as an alternative fuel for transportation.
Oyedele said transport operators were encouraged to pass savings from cheaper fuel to passengers through lower fares.
FG considers excess profit tax, tax relief for workers
As part of efforts to protect consumers, the federal government is considering an excess profit tax on energy industry operators found to be taking undue advantage of consumers.
Oyedele said the revenue generated from the proposed tax would be used exclusively to cushion the effects of high fuel prices on vulnerable Nigerians.
Possible interventions include transport assistance and vouchers for low-income urban workers earning the minimum wage.
Source: Getty Images
The minister also disclosed that the government would work with the National Assembly to consider additional tax relief for low-income earners under the 2027 Finance Bill.
The proposed measures are part of the government's broader efforts to reduce the impact of energy price shocks while maintaining a deregulated petroleum market.
Source: Legit.ng
