FG Negotiates N1,350 Per Litre Ceiling on Petrol Landing Cost

The federal government is negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol, finance minister Taiwo Oyedele has said. The plan is to stop pump prices from jumping each time global crude prices or exchange rates move.

Oyedele disclosed this on his verified X account, explaining that the arrangement is meant to make fuel prices more predictable for households and businesses.

How the price modulation will work

Under the proposed system, known as price modulation, refiners and importers would absorb any cost above the agreed ceiling and recover the difference later when crude oil prices or exchange rates become more favourable.

The minister was direct about what the plan is not. "This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them," he said.

He gave a simple illustration. "The reasoning is simple. 1,400 naira 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."

Oyedele also noted that transport fares often shoot up when fuel prices rise but do not fall at the same pace when fuel becomes cheaper.

The ceiling would be reviewed monthly, with adjustments made where necessary and the figures published to promote transparency.

Strategic fuel reserve and CNG push

The government also plans to establish a national strategic fuel reserve to shield the economy from future energy supply disruptions. Refined petroleum products would be released into the market under clearly defined and publicly available rules whenever global disruptions or hoarding threaten supply and price stability.

According to Oyedele, the reserve would help prevent artificial scarcity, discourage market manipulation and strengthen Nigeria's long-term energy security. He stressed that it would not involve subsidising fuel or fixing pump prices, but would help reduce sudden market shocks.

The government is also working with state governments to speed up the deployment of compressed natural gas (CNG) as an alternative transport fuel. Transport operators are being encouraged to pass savings from cheaper fuel to passengers through lower fares.

Excess profit tax and relief for workers

The federal government is considering an excess profit tax on energy operators found to be taking undue advantage of consumers. Revenue from the proposed tax would be used exclusively to cushion the effects of high fuel prices on vulnerable Nigerians.

Possible interventions include transport assistance and vouchers for low-income urban workers earning the minimum wage.

Oyedele added that the government would work with the National Assembly to consider additional tax relief for low-income earners under the 2027 Finance Bill.

The measures form part of a broader push to soften energy price shocks while keeping the petroleum market deregulated.

For consumers and businesses, the promise of a monthly-reviewed ceiling and a published figure could make fuel costs easier to plan around, if the negotiations with refiners and importers hold.