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The Federal Government has announced a 30-day discount on petrol sold at filling stations operated by the Nigerian National Petroleum Company Limited, NNPCL, as part of measures to cushion the impact of high fuel prices on Nigerians.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday at a press briefing on fuel prices and subsidy-related issues in Abuja.
Mr Oyedele said the discount would be available in the first instance for 30 days, with priority given to public transport operators across the country.
“We are offering a discount on petrol dispensed by NNPC 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 did not immediately disclose the exact amount of the discount or indicate how much motorists would pay per litre under the arrangement.
The intervention is expected to focus particularly on public transport operators, whose fuel costs have a direct impact on fares paid by commuters.
The announcement comes amid renewed concerns over the effect of petrol prices on transportation costs, household expenses and the prices of goods and services.
FG proposes N1,350 landing cost ceiling
Beyond the 30-day discount, Oyedele said the Federal Government was negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol as part of measures to reduce volatility in pump prices.
He said the proposed ceiling would be subject to periodic review.
“We are introducing price modulation. Pump prices should not have to follow every swing in global crude or exchange rate. The government is negotiating a ceiling of N1,350 a litre on the ex-gantry or landing cost of petrol to keep pump prices stable,” he said.
The minister explained that the proposed arrangement would require refiners and importers to absorb temporary increases in the cost of petrol and recover the difference when market conditions improve.
He said the mechanism was neither a subsidy nor price control, but an attempt to smoothen fluctuations in petrol prices.
According to him, the objective is to prevent consumers from being exposed to sharp increases whenever international crude oil prices or the naira exchange rate move adversely.
Govt insists measure is not subsidy
The announcement is likely to renew debate over the Federal Government’s position on petrol subsidy, which President Bola Tinubu announced the removal of shortly after assuming office in May 2023.
The subsidy removal resulted in a sharp increase in petrol prices and contributed to higher transportation and living costs across the country.
The Tinubu administration has repeatedly maintained that returning to the old subsidy regime would place an unsustainable burden on public finances.
Oyedele’s description of the latest intervention as a sale of petrol at cost is therefore significant, as the government seeks to distinguish the 30-day discount from the previous system under which government absorbed part of the cost of petrol to keep pump prices artificially low.
The minister’s announcement, however, did not immediately provide details of the financial structure of the discount, including the precise amount to be absorbed by NNPC or any other government agency.
Public transporters to get priority
The decision to prioritise public transporters suggests that the government is seeking to achieve a wider impact through lower operating costs for commercial transport operators.
Public transport operators, including bus, taxi and other commercial vehicle operators, typically pass changes in fuel costs to passengers through transport fares.
The Federal Government is therefore expected to rely on lower fuel costs for transport operators to moderate pressure on commuters.
BusinessDay reported that the arrangement is intended to target commercial transporters and ease pressure on transport fares, although the precise mechanism for identifying beneficiaries and enforcing the discount was not immediately disclosed.
It remains unclear whether private motorists will enjoy the same level of benefit as public transport operators under the arrangement.
Petrol price volatility
The 30-day discount is coming against the backdrop of efforts by the Federal Government to reduce fluctuations in petrol prices.
Reuters reported on Thursday that the proposed N1,350 ceiling on petrol’s ex-gantry cost is designed to shield consumers from sudden changes linked to global crude prices and movements in the naira exchange rate.
Under the proposed mechanism, refiners and importers would bear temporary increases when the cost rises above the agreed ceiling and recover the difference when market conditions become more favourable.
Mr Oyedele said this would allow consumers to enjoy greater stability in petrol prices instead of experiencing frequent increases and subsequent reductions.
“The reasoning is simple, N1,400 a litre today and N1,400 a litre tomorrow is better than N1,500 a litre today and N1,300 a litre tomorrow,” he said, according to reports of the briefing.
The government’s latest measures come as households and businesses continue to contend with elevated transportation and operating costs following the petrol subsidy removal and naira exchange-rate reforms.
The Federal Government is expected to provide further details on the implementation of the 30-day discount, including the effective price of petrol under the arrangement and how public transport operators will access the benefit.
The announcement also raises the question of what will happen after the initial 30-day period and whether the government intends to extend the discount depending on prevailing market conditions.
For now, the Federal Government says the measure is a temporary intervention aimed at providing immediate relief while broader efforts are made to stabilise petrol prices.
