The Federal Government has introduced petrol price modulation to stabilise pump prices and reduce volatility. Finance Minister Taiwo Oyedele announced the plan on Thursday at a press briefing in Abuja. As a result, fuel prices may now change every month instead of with every swing in global markets. The announcement aims to cushion Nigerians from high fuel prices and rising transport costs. Sojworldnews explains what the new mechanism means for motorists.
Oyedele first explained the logic behind the move. He said pump prices “should not have to follow every swing” in global crude or the exchange rate. Instead, the government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol. Therefore, the ceiling targets the cost before fuel reaches filling stations.
The mechanism works through refiners and importers. Where costs rise above the ceiling, they will carry the shortfall. Later, they can recover it when crude prices or exchange rates allow. However, the recovery cannot breach the ceiling. Consequently, the plan spreads cost spikes over time instead of passing them straight to motorists.
Oyedele rejected claims that the plan revives the old subsidy. He called it “neither a subsidy nor a price control.” According to him, the design aims to smooth prices over time rather than suppress them. In addition, he warned that restoring the subsidy could push petrol to at least ₦2,000 per litre, The Sun reported.
The minister also argued that stability beats sudden swings. He said a steady ₦1,400 per litre beats a jump to ₦1,500 followed by a fall to ₦1,300. Volatility itself, he added, “adds to uncertainty and costs.” Furthermore, he noted that fuel prices rarely fall as fast as they rise. A sharp spike hurts transporters, traders and households at once.
The minister also put numbers on the subsidy debate. He said returning petrol to its pre-reform price would cost more than ₦20 trillion yearly. Fixing it at ₦500 per litre would cost over ₦16 trillion, he added. Moreover, he warned that the exchange rate could approach ₦3,000 per dollar within months. In his view, a subsidy does not lower the cost of fuel.
The ceiling will not stay fixed. In other words, it works as a monthly reset rather than a permanent cap. Officials will review it every month and reset it where costs require. They will also publish the figures for transparency. As a result, motorists can track how the cap moves. Similarly, operators can plan their purchases with clearer expectations.
The ceiling does not mean petrol will sell for ₦1,350 per litre at filling stations, Channels TV reported. Instead, it limits the landing cost that feeds into retail prices. For example, NNPC earlier cut its Lagos pump price from ₦1,360 to ₦1,355 per litre, according to Legit.ng.
The briefing also covered other measures. NNPC will offer a 30-day discount on petrol, with priority for public transporters. Besides, the government plans forward sales of crude to domestic refiners. Oyedele gave an example of crude sold at $80 per barrel for six months. Metro Daily reported that this gives refiners certainty over their costs.
Meanwhile, critics have challenged the discount. Channels TV also carried a story in which Atiku Abubakar dismissed it as a publicity stunt. Debate has also grown over whether the discount amounts to a return of the fuel subsidy, Premium Times noted. The Presidency said President Tinubu backed the discount.
Overall, the plan still needs negotiation with refiners and importers. Therefore, pump prices may keep moving each month as the ceiling changes, so motorists should watch the monthly figures. Sojworldnews will report the first monthly review as soon as officials publish it.
Sources: Channels TV, Legit.ng, Blueprint, Metro Daily, The Sun, Premium Times.
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