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Fuel Crisis: NNPC Waives Petrol Profit Margin as FG Unveils Relief Measures
Fuel Crisis: NNPC Waives Petrol Profit Margin as FG Unveils Relief Measures
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NNPC Retail will sell petrol at cost for 30 days to cushion the impact of rising fuel prices.
FG is negotiating a ceiling on petrol’s landing cost to reduce sharp price fluctuations.
Government plans faster CNG deployment while expanding cash transfers and subsidised credit.
Channel
The Presidency says the measures are targeted relief and not a reversal of the 2023 petrol subsidy removal.
October 08, () – The Nigerian National Petroleum Company Limited (NNPCL) has agreed to waive its retail profit margin on petrol for the next 30 days as the Federal Government unveils a raft of measures to cushion Nigerians from the impact of surging global crude oil and petrol prices.
Under the arrangement, NNPC Retail will sell petrol at cost during the period, with the intervention expected to particularly benefit vulnerable households and commercial transport operators.
The Presidency said the measure was backed by President Bola Tinubu and was designed to provide immediate relief as global crude oil price shocks continue to affect petrol prices, transportation and logistics costs.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga, disclosed the measure in a statement issued on Thursday, following a briefing by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
According to the statement, NNPC Retail already sells petrol at the lowest price in the market but has now agreed to forgo its retail profit margin for 30 days.
This means that if NNPC’s landing cost is N1,300 per litre, for instance, the company would sell the petrol to Nigerians, particularly commercial transport operators, at N1,300 rather than adding a retail profit margin.
Oyedele expressed hope that other petroleum marketers would follow NNPC’s example, noting that the current sharp increase in crude oil and petrol prices was not expected to persist indefinitely.
The minister, however, stressed that the intervention should not be interpreted as a return to the petrol subsidy regime, which was removed on May 29, 2023.
FG Proposes N1,350 Petrol Cost Ceiling
As part of the broader response to fuel price volatility, the Federal Government is negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol.
Oyedele said the proposed ceiling was intended to prevent pump prices from responding sharply to every movement in global crude oil prices and the exchange rate.
Under the proposed arrangement, where the actual cost rises above the N1,350 ceiling, refiners and importers would carry the shortfall and recover it later when crude prices or exchange rates become favourable.
Oyedele said the arrangement would not amount to either a subsidy or price control.
“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them,” he said.
The minister said the ceiling would be reviewed monthly, with adjustments made where necessary and the figures published to ensure transparency.
He argued that stabilising petrol prices was necessary because sudden increases quickly translate into higher transport fares and logistics costs, while reductions in fuel prices often take longer to reflect in fares and the prices of goods.
Forward Crude Sales to Domestic Refineries
The Federal Government is also working on forward sales of crude oil to domestic refineries to shield petrol prices from global market volatility.
Oyedele said increased crude production and the release of previously committed crude would provide additional supplies for domestic refiners.
The measure is expected to strengthen domestic refining and reduce the exposure of local petrol prices to sudden international market movements.
The government is also collaborating with states and security agencies under the 2025 tax reform laws to rein in the collection of road taxes and levies that contribute to higher transport and logistics costs.
CNG Rollout To Cut Transport Costs
CNG Buses Photo credit Freedom Square
The government is also accelerating the rollout of compressed natural gas (CNG) in partnership with state governments.
According to the Presidency, CNG is between 60 and 70 per cent cheaper than petrol, and transport operators are expected to pass the savings to passengers through lower fares.
The government is also increasing funding for cash transfers to vulnerable households and providing subsidised credit for small businesses and consumers.
These measures are intended to provide targeted support to households and businesses facing the greatest pressure from rising fuel and transportation costs.
FG Eyes Excess Profit Tax
Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele
The Federal Government said it would consider an excess profit tax for operators that take undue advantage of consumers anywhere along the energy value chain.
According to the Presidency, proceeds from any tax imposed on price gouging would be used exclusively to cushion the impact of fuel prices through transport support or vouchers for urban minimum-wage earners.
The government also plans to work with the National Assembly to consider enhanced tax relief for low-income earners under the 2027 Finance Bill.
It is simultaneously cutting regulatory costs that add to the cost of doing business and, indirectly, contribute to higher prices of goods and services.
National Strategic Fuel Reserve
The Federal Government also announced plans to establish a National Strategic Fuel Reserve as a buffer against future energy shocks.
Under the proposed arrangement, refined petroleum products would be released into the market under clear and published rules whenever global disruptions or hoarding threaten supply and price stability.
The Presidency said the reserve would not be a subsidy mechanism or a means of fixing prices, but would instead help secure supply, prevent artificial scarcity, deter market manipulation and reduce price volatility.
The government said the initiative was intended to strengthen long-term energy security and ensure that a deregulated petroleum market can deliver more stable growth without exposing consumers to sudden supply shocks.
Traffic, Logistics Measures
The government is also targeting fuel consumption associated with traffic congestion and inefficient logistics.
According to the Presidency, traffic management agencies will work to improve traffic flow, particularly in major urban centres, thereby reducing fuel consumption.
The government also said the newly launched address codes by the Nigerian Postal Service (NIPOST) would help make logistics more efficient and reduce delivery costs.
Presidency Rules Out Subsidy Return
President Bola Tinubu
The Presidency maintained that none of the measures announced represents a return to blanket petrol subsidy.
It argued that restoring the former subsidy regime would expose the country to the fiscal and market problems that accompanied the policy in the past.
“Removing the fuel subsidy came at a price. But the alternative has been tried. Nigeria has already lived through that cycle: scarcity, smuggling, a collapsing currency and a fiscal crisis,” the Presidency said.
It added that Nigeria could not afford to return to the previous system in response to what it described as a temporary disruption, particularly as economic reforms begin to take effect.
“Government is not out to reverse a necessary reform designed to set our country on the path towards sustained prosperity. It is to ensure its gains reach more Nigerians, faster and in more tangible ways,” the statement said.
The Presidency further disclosed that the Federal Government was working on a comprehensive package of fiscal measures aimed at bringing inflation down to single digits sustainably in the near term.
Background
The latest measures come amid renewed pressure on petrol prices following a rise in global crude oil prices.
Since President Tinubu announced the removal of the petrol subsidy on May 29, 2023, the price of petrol has increasingly reflected market conditions, including international crude prices, foreign exchange movements, supply costs and domestic refining capacity.
The subsidy removal triggered a sharp increase in petrol prices and transportation costs, with the effects feeding into food prices, logistics and the wider cost of living.
The latest global oil price surge has heightened concerns over another round of increases and its potential impact on households and businesses.
The Federal Government has consistently maintained that a blanket subsidy is fiscally unsustainable.
Its latest response is therefore focused on targeted relief, price-smoothing mechanisms, alternative fuels and strategic reserves rather than a return to the former subsidy system.
The 30-day decision by NNPC Retail to surrender its petrol profit margin is expected to provide immediate relief while the government works to implement the broader measures designed to moderate fuel price volatility and its impact on Nigerians.
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