The Federal Government has announced plans to introduce a price-modulation mechanism for petrol, with a proposed ceiling of ₦1,350 per litre on the ex-gantry or landing cost of the commodity.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday during a press briefing on petrol prices and subsidy-related issues in Abuja.
Oyedele said the proposed arrangement was designed to promote stability in petrol prices, stressing that it should not be regarded as a subsidy or a form of price control.
“We are introducing price modulation. The government is negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol to keep the price stable.
“When costs rise above the ceiling, refineries and importers will carry the shortfall and recover it later. This is neither a subsidy nor price control,” he said.
Under the proposed mechanism, refineries and importers would absorb any increase in costs above the agreed ceiling and recover the difference at a later time.
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The minister also announced plans for the forward sale of crude oil to domestic refineries as part of measures to reduce the impact of fluctuations in international crude oil prices on petrol costs.
According to him, the arrangement would enable domestic refiners to plan their operations more effectively while providing greater certainty around petrol prices.
“As production rises and previously committed crude is freed up, these will shield pump prices from volatility in the global markets.
“So the idea we have is an idea that is sustainable. You can sell your crude forward.
“We say to the refiners, for the next six months, we are selling you crude at $80 per barrel, for example. That preserves your budgets, provides certainty to the refiners and price stability to the consumer,” Oyedele said.
The proposed price-modulation mechanism comes amid continued concerns over fluctuations in petrol prices and the impact of global oil market volatility on consumers and domestic refiners.
The Federal Government said the planned arrangement is intended to provide greater predictability for refiners while helping to maintain stability in the domestic petrol market.