The Chairman of the Alliance on Surviving COVID-19 and Beyond (ASCAB), Femi Falana, has called on the Nigerian Federal Government to stop importing Premium Motor Spirit (PMS) and adopt a domestic production cost pricing model. This approach would guide pricing decisions based on domestic production and refining costs. Falana made this statement on October 11, 2026, amid public demands for reduced petrol prices.
Falana argued that the current Import Parity Price method encourages fuel importation and exposes Nigerians to international prices. Despite Nigeria's crude oil resources and domestic refining facilities, this method does not provide relief to citizens. The Federal Government plans to introduce a price-modulation mechanism with a proposed ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol.
The Nigerian National Petroleum Company Limited (NNPCL) retail outlets are offering a N66-per-litre discount on petrol as part of a 30-day promotional programme. However, Falana questioned the substantial benefits to Nigerians given that NNPCL operates only about 900 outlets, compared to the 22,681 registered filling stations nationwide. This limited coverage may not significantly impact petrol prices for most Nigerians.
Falana suggested replacing the Import Parity Price method with Production Cost Pricing. This approach would be based on crude oil production, refining, transportation, and distribution costs within Nigeria. According to Falana, this method would reflect the cost of producing and refining crude oil domestically rather than pricing petrol as an imported commodity.
Citing petroleum engineer Professor Izielen Agbon, Falana stated that adopting the Production Cost Pricing method could bring petrol prices down to between N435 and N687 per litre. These estimates depend on domestic production costs and the prevailing exchange rate. Falana noted that the Federal Government's experts have not challenged Agbon's claims.
Falana cautioned the government against dismissing alternative economic policies, recalling the Structural Adjustment Programme (SAP) debates. He urged the government to consider alternative economic perspectives in determining petrol prices. According to Falana, there are other options available to address Nigeria's current economic challenges.
The ASCAB chairman argued that there is no economic or political justification for selling imported petrol to Nigerians at international prices. He called on the government to reject the World Bank's demand that Nigeria continue importing PMS and instead adopt domestic production and refining costs to guide pricing decisions.
Key points
- Falana urges the Nigerian government to adopt a domestic production cost pricing model for petrol.
- The proposed alternative pricing model could bring petrol prices down to between N435 and N687 per litre.
- Falana cautions the government against dismissing alternative economic policies in determining petrol prices.
