The federal authorities says it’s negotiating a ₦1,350 per litre ceiling on the ex-gantry or touchdown price of petrol as a part of measures to defend Nigerians from sharp fluctuations in gasoline prices amid rising global oil prices.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday at a press briefing in Abuja on rising petroleum product prices and requires the return of gasoline subsidy.
Mr Oyedele mentioned the proposed ceiling would forestall petrol prices from instantly reflecting each motion in global crude oil prices and the trade charge.
“Pump prices should not have to follow every swing in global crude or the exchange rate,” he mentioned.
Under the proposed association, when the price of petrol rises above the ceiling, refiners and importers would carry the shortfall and get better it later when crude prices or the trade charge develop into extra beneficial.
The minister mentioned the association could be reviewed month-to-month, with the figures revealed to guarantee transparency.
He harassed that the measure was neither a subsidy nor a price management, however an try to smoothen price actions over time.
Mr Oyedele mentioned the federal government’s goal was to forestall sharp price will increase that would worsen transportation and logistics prices for households and companies.
He defined that comparatively steady petrol prices could be preferable to sudden will increase adopted by reductions that will not instantly translate into decrease transport fares.
“₦1,400 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 mentioned.
Global oil shock
The proposed price ceiling comes amid a pointy rise in global crude and refined petroleum product prices following the battle within the Gulf.
Since the United States and Israel launched assaults on Iran in February, disruptions to oil provide by means of the Strait of Hormuz have contributed to increased global crude prices, with Brent crude rising above $100 per barrel.
The affect has been felt in Nigeria regardless of the nation being an oil producer, as increased worldwide crude, freight and refined-product prices feed into the home gasoline market.
While Nigeria may benefit from increased crude prices by means of elevated authorities income, fluctuations in petrol, diesel and aviation gasoline prices have elevated prices for households and companies, including to the cost-of-living pressures that adopted the elimination of petrol subsidy in 2023.
The sustained strain has additionally renewed requires the reintroduction of gasoline subsidy, with the difficulty more and more that includes in political debates forward of the 2027 normal elections.
Mr Oyedele mentioned Brent crude was buying and selling above $100 per barrel, nearly 50 per cent increased than its pre-war degree.
He mentioned delivery by means of the Strait of Hormuz had fallen to roughly 13 per cent of its pre-war degree by mid-September, whereas diesel exports from the Middle East and Russia had declined by 75 per cent from a 12 months earlier.
The minister added that crude tanker charges from West Africa reached file ranges in September as international locations sought different sources of provide.
He mentioned the developments had contributed to the rise in Nigeria’s petrol price from about N830 per litre earlier than the battle, when crude traded at round $70 per barrel, to a median of about ₦1,400 per litre at the moment.
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Other measures
Mr Oyedele mentioned the proposed price ceiling was one among a number of measures being thought of by the federal government to reasonable the affect of rising gasoline prices with out returning to a blanket subsidy.
Other measures embrace a 30-day margin low cost on petrol offered at NNPC Limited stations, with precedence given to public transporters.
The authorities can also be contemplating ahead gross sales of crude to home refineries to defend petrol prices from global market volatility as home crude manufacturing improves.
It plans to take away unlawful street taxes and levies that enhance transportation and logistics prices and broaden money transfers and subsidised credit score for susceptible households and small companies.
The authorities additionally plans to speed up the rollout of compressed pure fuel (CNG), whereas contemplating an extra revenue tax on vitality operators that take undue benefit of customers.
Mr Oyedele mentioned the federal government was additionally investing in a National Strategic Fuel Reserve to launch refined merchandise into the market in periods of global disruption or synthetic shortage.
He mentioned the reserve would assist scale back price volatility with out fixing prices or reintroducing gasoline subsidy.
The minister mentioned the federal government remained dedicated to sustaining the positive factors from the 2023 elimination of petrol subsidy whereas making certain that the burden of upper vitality prices didn’t fall disproportionately on susceptible Nigerians.
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