The Nigerian National Petroleum Company Limited (NNPC) will sell petrol at cost to help households manage the impact of rising global crude oil prices, the Federal Government announced on Thursday. This decision, backed by President Bola Tinubu, does not mark a return to the petrol subsidy that ended on 29 May 2023.
Finance Minister Taiwo Oyedele revealed this measure, along with several others, during a press briefing. The NNPC, which already offers the lowest petrol prices in the market, plans to implement this new arrangement within 30 days.
According to a statement from the Presidency, if the NNPC’s landing cost is N1,300, it will sell petrol to Nigerians, especially commercial vehicles, at that same price. The government hopes other marketers will follow suit, as the surge in crude and petrol prices is anticipated to be temporary.
The federal administration is also negotiating a ceiling of N1,350 per litre on the landing cost of petrol to ensure stable pump prices. Should costs exceed this limit, refiners and importers will absorb the shortfall until market conditions allow for recovery without breaching the ceiling.
“This is neither a subsidy nor a price control,” Oyedele explained. “It aims to smooth prices over time, rather than suppressing them.” He stated that consistent pricing provides more certainty for consumers and businesses than fluctuating prices.
Other measures include selling crude to domestic refineries to protect pump prices from global price swings. The government plans to enhance the taxation process to reduce transport costs and is boosting cash transfers to vulnerable households and subsidised credit for small businesses.
Moreover, the rollout of compressed natural gas (CNG) is expected to reduce transport costs, as CNG is significantly cheaper than petrol. The government is also contemplating an excess profit tax for those exploiting consumers in the energy sector.
The Presidency noted that these actions do not reinstate a blanket subsidy but aim to ensure stable supply and prevent market manipulation. It emphasised that while removing the fuel subsidy has challenges, the alternative—marked by scarcity and fiscal crises—is not an option.
The government is focused on implementing systemic reforms to ensure the benefits reach more Nigerians effectively, while also working on measures to bring inflation down to single digits in the near future.
