The Federal Government is planning a National Strategic Fuel Reserve and a mechanism to cushion petrol prices as pump prices rise to about N1,400 per litre amid global oil-market disruptions.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this in Abuja, saying the government was negotiating a ceiling of N1,350 per litre on the landing cost of petrol.
Under the proposed arrangement, refiners and importers would initially absorb any difference when market costs rise above the N1,350 ceiling and recover the shortfall when crude prices or exchange-rate conditions improve.
Oyedele said the ceiling would be reviewed monthly, with the figures published to promote transparency.
“Pump prices should not have to follow every swing in global crude or the exchange rate,” he said.
The minister stressed that the proposed mechanism was neither a return to fuel subsidy nor an attempt to impose price controls but a way of reducing the impact of sudden market shocks on consumers and businesses.
The government also plans to sell crude oil to domestic refineries through forward contracts as local crude production increases.
Oyedele said the arrangement would give refiners greater certainty over feedstock costs and reduce their exposure to international crude-price fluctuations.
The measures are being considered as global oil-market disruptions have pushed Brent crude above $100 per barrel, raising the cost of crude, refined products and transportation.
According to Oyedele, petrol prices in Nigeria have risen from about N830 per litre before the latest conflict, when crude traded at around $70 per barrel, to about N1,400 currently.
He rejected calls for a return to petrol subsidies, including a proposed “production subsidy” for local refiners.
Oyedele argued that selling crude to refiners at a discount and passing the benefit to consumers would ultimately amount to a consumption subsidy because the government would bear the cost.
He said Nigeria’s estimated petrol consumption of about 50 million litres daily meant restoring the pre-reform pump price would cost more than N20tn annually.
Even a pump price of N500 per litre, he said, would require more than N16tn annually, excluding increased consumption and smuggling.
The minister warned that cheaper petrol in Nigeria could also encourage cross-border diversion, creating supply pressures and increasing incentives for fuel smuggling.
He said the removal of subsidy had released N15.8tn to the Federation Account between June 2023 and December 2025, with N10.4tn going to state and local governments.
Oyedele said the additional revenue had helped states meet salary obligations, while the Federal Government had directed resources towards wages, infrastructure, electricity support, social transfers and higher debt-servicing costs associated with economic stabilisation.
Beyond the proposed landing-cost ceiling, the government announced a 30-day margin discount on petrol sold at NNPC Limited stations, with public transport operators to receive priority.
It is also accelerating the rollout of compressed natural gas, increasing support for vulnerable households and subsidised credit, while working with state governments to remove illegal road taxes and levies that add to transport and logistics costs.
The government is considering an excess-profit tax on energy operators accused of taking undue advantage of consumers, with the proceeds potentially used to support transport costs or provide vouchers for vulnerable urban minimum-wage earners.
Oyedele said the proposed National Strategic Fuel Reserve would allow the government to release refined products into the market when global disruptions or market manipulation threaten supply and price stability.
The reserve, he explained, would not be used to fix prices but to secure supply, discourage artificial scarcity and reduce the severity of future price shocks.
The government is also pursuing measures to lower logistics costs through improved traffic management and the use of NIPOST address codes, while targeting further fiscal measures to bring inflation down to single digits.
Oyedele said the interventions were designed to preserve the market reforms introduced since 2023 while providing targeted protection for households and businesses against temporary shocks.
However, he did not disclose who would initially bear the shortfall under the proposed N1,350 landing-cost ceiling, how recovery would be calculated or when the mechanism would begin.
Meanwhile, Comptroller-General of the Nigeria Customs Service, Adewale Adeniyi, said the Service, in collaboration with security agencies and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, had intensified efforts to prevent petroleum products from being smuggled across Nigeria’s borders.
Adeniyi cited Operation Whirlwind, coordinated with the Office of the National Security Adviser, as part of efforts to stop the diversion of Nigerian fuel to neighbouring countries.
He said the operation was aimed at reducing the leakage of relatively cheaper Nigerian petroleum products into neighbouring markets and ensuring adequate domestic supply.
The government also provided an update on gas infrastructure expected to improve energy supply, particularly in Abuja.
The Group Managing Director of NNPC Limited, Bayo Ojulari, said delays in the delivery of equipment had affected the project, partly due to disruptions in international manufacturing and supply chains caused by the conflict.
Ojulari said the required equipment was now being delivered and that the project was expected to bring gas to Abuja by November.
He said increased domestic gas availability could support power generation while reducing pressure on petrol and other more expensive energy sources.
Discussion0