…say government will offer discount on petrol through NNPC for 30 days
By Gloria Ikibah
The Federal Government has rejected calls for a return to blanket fuel subsidy, warning that such a move could worsen petrol prices, weaken the naira and put further pressure on public finances.
Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, said the government was instead introducing a series of measures to cushion the impact of high fuel prices, including a proposed ₦1,350 per litre ceiling on the ex-gantry or landing cost of petrol.
Oyedele disclosed this on Thursday at a press briefing on fuel prices and subsidy, where he explained the government’s position on calls for the restoration of fuel subsidy amid rising petrol prices.
He said the government understood the pressure being faced by Nigerians but maintained that returning to a blanket subsidy would only provide temporary relief while creating deeper economic problems.
“We do not like 1,400 per litre. It’s expensive. If subsidy had not been removed by Mr President, what we’d be dealing with today would be far worse than 1,400. And I’ll explain to you as we go along,” he said.
According to him, the current increase in petrol prices was largely driven by global developments, including higher crude prices, freight costs and refined-product shortages arising from the conflict in the Gulf.
Oyedele said Brent crude had risen above $100 per barrel, while diesel exports from the Middle East and Russia had fallen significantly, pushing up the cost of refined petroleum products globally.
He said crude oil had been trading at about $70 per barrel before the conflict, when petrol sold for about N830 per litre, compared with the current average of about N1,400.
The minister said Nigeria was also facing higher transport and logistics costs as a result of the increase in fuel prices, with the burden falling particularly heavily on vulnerable households.
However, he said the country had avoided fuel scarcity, with petrol remaining available across all states.
“Fuel has remained available in every state. In a crisis of this kind, availability is the first form of affordability,” Oyedele said. 
Subsidy could push petrol to ₦2,000
Oyedele warned that restoring subsidy could have severe consequences for the economy, particularly because the cost of petrol is affected by the exchange rate, crude oil prices, freight and refining costs.
He argued that what was being proposed as a production subsidy can, in practice, become a consumption subsidy because the government would still have to absorb the difference between market costs and the pump price.
“So be clear. What is being proposed is not a production subsidy. A true production subsidy supports a producer who cannot compete at market prices. This is different. It is a discount on crude passed through to the pump. So it’s a consumption subsidy by another route with the same bill attached,” he added.
The minister estimated that returning petrol to its pre-reform price can cost more than N20 trillion annually, while a pump price of N500 per litre can cost more than N16 trillion a year.
He said Nigeria currently consumes about 50 million litres of petrol daily and warned that cheaper petrol can encourage higher consumption, smuggling and cross-border leakage.
Oyedele said a return to subsidy will also put pressure on government revenue, borrowing costs and the naira.
He further warned that the resulting pressure on the currency can ultimately make petrol even more expensive.
“Weaker revenues invite a sovereign credit downgrade. As the rating agencies themselves have already signalled. And you can read all their reports. That would put at risk the upgrade we have recently earned. Including our first from S&P in 14 years.
Borrowing becomes costlier. Capital leaves. Reserves fall. The Naira weakens.
“Our estimate is that the exchange rate could approach 3,000 Naira to the dollar within months. And the so-called subsidised petrol will cost at least 2,000 Naira per litre. This is well above what Nigerians pay today.
“A subsidy does not lower the cost of oil. It only changes how it is paid,” Oyedele said.
FG plans 30-day petrol discount
Rather than restore subsidy, Oyedele disclosed that the government will offer a discount on petrol sold through NNPC Limited stations for an initial period of 30 days, with priority given to public transport operators.
“Number one, imagine discount at NMPC stations. We are offering a discount on petrol dispensed by NMPC Limited for the next 30 days in the first instance, with priority for public transporters nationwide. So it’s not a subsidy. Government is just saying we sell to you at cost,” he said.
The minister also revealed plans for forward sales of crude to domestic refineries as crude production increases and previously committed volumes become available.
He said the arrangement would give refineries greater certainty and help shield consumers from sharp movements in international crude prices.
Govt proposes ₦1,350 ceiling
Oyedele said the government was also negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol as part of a proposed price modulation mechanism.
“Pump prices should not have to follow every swing in global crude for the exchange rates. The government is negotiating a ceiling of 1,350 Naira a litre on the ex-gantry or landing course of petrol to keep pump prices stable,” he said.
He explained that when costs rise above the ceiling, refiners and importers will carry the shortfall and recover it later, while favourable movements in crude prices or exchange rates would help offset the difference.
Oyedele said the ceiling would be reviewed monthly, with the figures published to promote transparency.
“When crude prices or exchange rates allow without breaching the ceiling, this is neither a subsidy nor a price control. It is designed to smooth prices over time rather than suppressing them.
“The reasoning is simple. 1,400 Naira a litre today and 1,400 Naira a litre tomorrow is better than 1,500 Naira a litre today and 1,300 Naira a litre tomorrow. Why? Because volatility itself adds to uncertainty and costs. And when fares go up sharply, they rarely come down as fast,” he said.
Govt targets levies, transport costs
The minister also said plans are on to work with state governments to eliminate illegal road taxes and levies contributing to higher transport and logistics costs.
He said some truck operators had reported spending about N700,000 on levies during a single journey transporting food from northern Nigeria to the south.
“We’re reining in the road taxes and levies that inflate fares and logistic costs. Some of the truckers we spoke to said they need to budget about 700,000 Naira a trip just to move food from the north to the south,” he said.
The government, he added, will increase funding and cash transfers to vulnerable households and expand subsidised credit for small businesses and consumers.
It also plans to accelerate the rollout of compressed natural gas (CNG) vehicles and work with states to expand cheaper public transport options.
Oyedele said the government will consider an excess profit tax on operators found to be taking undue advantage of consumers along the energy value chain.
“The proceed will be used exclusively to cushion the impact of oil prices through transport support or voucher for or ban minimum wage earners who are the most vulnerable,” he said.
He also said there were plans to work with the National Assembly on enhanced tax relief for low-income earners under the 2027 Finance Bill.
Govt rules out blanket subsidy
Oyedele said the government had already taken steps to reduce the impact of fuel prices through tax and duty waivers, local refining, crude-for-naira transactions, CNG conversion and other interventions.
He said tax and duty waivers on petroleum products currently saved consumers between N400 and N600 per litre, representing more than N5 trillion in potential tax revenue.
The minister also said more than 120,000 vehicles were now running on CNG, supported by more than 400 conversion centres, 96 refuelling stations and 18 liquefied-to-compressed natural gas stations.
He said more than 550 CNG buses had been deployed, with fares falling by between 30 and 50 per cent in areas where they operate.
Oyedele said the government was also working on a national strategic fuel reserve that would allow refined products to be released during major global disruptions or artificial scarcity.
He stressed that the proposed interventions were not intended to reverse the fuel subsidy reforms.
“To be perfectly clear, none of these measures restore a blanket subsidy. To do so would amount to creating longer-term harm for a short-term cure,” he said.
The minister said the government remained open to alternative proposals but insisted that any plan to reduce petrol prices must clearly show its cost, funding source and expected pump price.
“We remain open to ideas. But any credible proposal should answer three questions. Number one. What will it cost? Number two. How will it be funded sustainably? Number three. What pump price will it deliver? We will engage in good faiths. With any proposal that shows it’s arithmetic,” he said.
Oyedele said the government was also working on a broader package of fiscal measures aimed at bringing inflation down to single digits sustainably in the near term, with further details expected in the coming months.
