The Nigerian Federal Government has revealed plans to implement a price modulation framework for premium motor spirit, popularly known as petrol, establishing a maximum cap of ₦1,350 per litre on the ex-gantry or landing cost of the product.
The development was made public on Thursday in Abuja by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, during a press briefing focused on domestic fuel pricing and subsidy reforms.
Understanding the Price Modulation Framework
According to the government, this new strategy aims to maintain price stability across the country. Officials emphasized that the mechanism is distinct from conventional subsidies and does not represent a direct price control system.
Under the terms of the negotiated arrangement, a ceiling of ₦1,350 per litre will be set on the landing or ex-gantry cost. When market forces drive import or production costs above this threshold, local refineries and petroleum importers will absorb the immediate financial shortfall, with provisions to recover their expenses at a later period.
Forward Sale of Crude Oil to Protect Local Markets
To further shield consumers from the unpredictable swings of the international oil market, the Federal Government plans to introduce forward sales of crude oil to domestic refineries.
This measure is designed to give local refiners a more predictable operating environment, allowing them to manage their production cycles with greater financial certainty. For instance, the government could commit to selling crude oil to local refiners at a locked-in rate, such as $80 per barrel, for a continuous six-month period.
By freeing up previously committed crude resources as national production rises, the government hopes to establish a sustainable model that protects domestic pump prices from external global shocks while giving businesses the predictability they need to thrive.