The Nigerian Presidency has announced a plan to reduce the impact of rising petrol prices on Nigerians. The Nigerian National Petroleum Company (NNPC) will sell petrol at cost for the next 30 days, particularly to support vulnerable households and commercial transport operators. This move is aimed at providing relief to households facing higher transportation and living costs. The NNPC will forgo its retail profit margin during this period.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced the new arrangement as part of additional measures being introduced by the Federal Government in response to the recent rise in global crude oil and petrol prices. The measure has the backing of President Bola Tinubu and is expected to give priority to public transport operators. Oyedele emphasized that the decision should not be interpreted as a return to the petrol subsidy regime that was removed by Tinubu on May 29, 2023.
Under the proposed arrangement, NNPC Retail will sell petrol without adding its retail profit margin during the 30-day period. If the company's landing cost is N1,300 per litre, it would sell the product at N1,300 rather than adding its usual retail margin. The government hopes that other oil marketers will follow the example of NNPC. The rise in international crude prices and the resulting pressure on petrol prices are not expected to continue indefinitely, making the temporary measure necessary to cushion Nigerians.
The Federal Government also announced plans to facilitate forward sales of crude oil to domestic refineries. As domestic crude production increases and previously committed crude is made available, the arrangement would help protect local petrol prices from sudden changes in international market conditions. Another major measure announced by the government is a proposed ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol. This is designed to smooth prices over time rather than suppressing them.
The government is negotiating the arrangement with the aim of preventing sudden increases in petrol prices when international crude prices or exchange rate movements push up the cost of the product. Under the proposed arrangement, where the actual cost rises above the N1,350 ceiling, refiners and importers would initially carry the difference and recover it later when crude prices or exchange rates become more favourable. The objective is to reduce sudden price movements that could immediately translate into higher transport fares and increased prices of goods.
The Federal Government also announced measures to address other factors contributing to high transportation and logistics costs. Under the 2025 tax reform laws, the government is working with state governments and security agencies to reduce the collection of road taxes and levies that add to the cost of transporting people and goods. The government is also increasing funding for cash transfers to vulnerable households and subsidized credit for small businesses and consumers.
The government plans to work with the National Assembly on enhanced tax relief for low-income earners under the 2027 Finance Bill. It further announced plans to reduce regulatory costs and other forms of red tape that add to the cost of doing business and eventually contribute to higher prices of goods and services. The Presidency also announced plans to improve traffic and logistics management in major urban centers to reduce fuel consumption.
Key points
- NNPC will sell petrol at cost for 30 days to support vulnerable households and commercial transport operators.
- The government proposes a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol.
- The government is working to reduce regulatory costs and other forms of red tape that add to the cost of doing business.
