The Bola Tinubu-led administration in Nigeria has made it clear that it will not revisit the fuel subsidy reform that was abolished over three years ago. According to Presidential spokesperson, Bayo Onanuga, the government has no intention of going back on the reform. Instead, it plans to introduce additional measures to ensure that the benefits of the reform reach more Nigerians faster and in more tangible ways.
As part of these measures, the Nigerian National Petroleum Company Limited (NNPCL) has agreed to forgo its petrol retail profit margin and sell petrol at cost to cushion vulnerable households. This move is aimed at shielding Nigerians from the impact of global crude oil price shocks and volatility. NNPC Retail, which already sells petrol at the lowest price in the market, will commence the new arrangement within the next 30 days.
Under the initiative, if NNPC's landing cost is N1,300 per litre, the company will sell petrol at the same price, particularly to commercial transport operators. This move is expected to provide relief to Nigerians who have been affected by the rising cost of living. The Federal Government is also introducing forward sales of crude oil to domestic refineries to shield pump prices from volatility in the global market.
The government is negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol to stabilise pump prices. Under the proposed arrangement, where costs rise above the ceiling, refiners and importers will bear the shortfall and recover it later when crude oil prices or the exchange rate become more favourable. This move is designed to smooth prices over time rather than suppressing them.
The interventions also extend to transportation and logistics costs, with the Federal Government working with states and security agencies to rein in the collection of road taxes and levies that inflate fares and logistics costs. The government is committed to ensuring that the gains of the petrol market reforms reach more Nigerians, faster and in more tangible ways.
According to Onanuga, the ceiling will be reviewed monthly, reset as costs require, and the figures published for transparency. The government is not out to reverse a necessary reform designed to set the country on the path towards sustained prosperity. Instead, it aims to ensure that the benefits of the reform are felt by more Nigerians.
The Federal Government is also increasing funding for cash transfers to the most vulnerable. The interventions are intended to cushion the impact of rising global crude oil prices and volatility on households without undermining the petrol market reforms introduced by the administration.
Key points
- The Nigerian government has agreed on a N1,350 per litre cost ceiling for petrol.
