The Federal Government says it is introducing a new price modulation mechanism aimed at cushioning Nigerians from sharp increases in the price of petrol.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, says the government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol.
Oyedele made the disclosure during an ongoing Ministerial Press Briefing, where he addressed questions surrounding rising fuel prices, subsidy removal and the government’s response to current pressures in the energy market.
According to the minister, the proposed arrangement is designed to provide greater stability in petrol pricing without returning to the former subsidy regime.
Oyedele says the ₦1,350 ceiling should not be interpreted as a subsidy or conventional price control.
He explained that when the cost of petrol rises above the agreed ceiling, refineries and importers would initially bear the shortfall, with the understanding that they would recover the difference later when market conditions improve.
The minister says the approach is intended to moderate the impact of sudden increases in global energy prices on Nigerian consumers while maintaining the broader principles of the government’s fuel-market reforms.
“We are introducing price modulation. Government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol to keep the price stable.”
Oyedele’s announcement comes amid renewed public concern over the rising cost of petrol and its wider impact on transportation, food prices, household expenses and businesses across the country.
The minister attributed the recent increase in fuel prices largely to what he described as a global shock, saying countries around the world are dealing with the consequences of rising crude oil and energy prices.
He explained that before the latest conflict and international market disruptions, crude oil was trading at around 70 dollars per barrel, while petrol sold for approximately ₦830 per litre in Nigeria.
Today, according to Oyedele, petrol prices are averaging around ₦1,400 per litre, reflecting the impact of higher international energy costs.
“Elevated fuel prices is caused by a global shock felt everywhere, and I mean every single country on earth is dealing with this issue.”
The minister further defended the decision by the President Bola Ahmed Tinubu administration to remove the petrol subsidy, arguing that maintaining the previous arrangement would have exposed the Nigerian economy to even greater pressure.
Oyedele said although the removal of the subsidy has resulted in significant changes in petrol prices, the government believes the policy was necessary to protect the country’s finances and reduce the burden created by subsidising fuel consumption.
He argued that the current global crisis would have produced an even greater impact on Nigeria if the old subsidy regime had remained in place.
“Ironically, without the removal of subsidy, the impact would have been far greater.”
The government’s proposed price modulation system therefore represents an attempt to strike a balance between market realities and the need to shield consumers from sudden price increases.
Under the proposed arrangement, the ₦1,350 per-litre ceiling would apply to the ex-gantry or landing cost, rather than necessarily representing a fixed pump price at every filling station.
The distinction is important because other components, including logistics, transportation, distribution and retail margins, can influence the final price paid by consumers.
The government says further details of the arrangement will emerge as negotiations with relevant stakeholders progress.
For millions of Nigerians already struggling with high transportation and living costs, the proposed mechanism could provide some relief if successfully implemented.
But questions remain over how the system will work in practice, how accumulated shortfalls will be recovered by refiners and importers, and how the government will ensure that the arrangement does not recreate the financial pressures associated with the former subsidy regime.
For now, the Federal Government says its objective is clear: to moderate the effect of global oil-market shocks while avoiding a return to the old fuel subsidy system.
The proposal will be closely watched by consumers, oil marketers, domestic refiners and businesses as Nigeria continues to navigate the difficult economics of petrol pricing.
