The Federal Government has unveiled plans to introduce a price-modulation system for petrol, proposing a ceiling of ₦1,350 per litre on the commodity’s ex-gantry or landing cost.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday at a press briefing in Abuja, where he addressed issues surrounding petrol prices and subsidy arrangements.
Oyedele explained that the proposed mechanism was intended to reduce fluctuations in petrol prices by ensuring that costs remain within an agreed ceiling.
He stressed that the arrangement should not be regarded as a subsidy or government-imposed price control.
“We are introducing price modulation. The government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol to keep the price stable.
“When costs rise above the ceiling, refineries and importers will carry the shortfall and recover it later. This is neither a subsidy nor price control,” he said.
Under the proposed framework, refiners and fuel importers would initially bear any costs that exceed the agreed ₦1,350 ceiling, with the difference to be recovered subsequently.
The minister also disclosed plans by the Federal Government to introduce forward crude oil sales to domestic refineries as another measure aimed at reducing the impact of international market volatility on petrol prices.
According to him, the arrangement would give local refiners greater certainty in planning their operations while helping to provide more predictable petrol prices for consumers.
Oyedele explained that as crude production increases and previously committed supplies become available, the government could use the additional volumes to shield domestic fuel prices from fluctuations in the international market.
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“As production rises and previously committed crude is freed up, these will shield pump prices from volatility in the global markets.
“So the idea we have is an idea that is sustainable. You can sell your crude forward.
“We say to the refiners, for the next six months, we are selling you crude at $80 per barrel, for example. That preserves your budgets, provides certainty to the refiners and price stability to the consumer,” Oyedele said.
The proposed measures are aimed at providing greater stability for domestic refiners while reducing the exposure of petrol prices to sudden movements in the global crude oil market.