New fuel price: NNPC has suspended petrol retail profit – Presidency

The Nigerian National Petroleum Company (NNPC) Limited will suspend its petrol retail profit margin and sell the product at cost for 30 days as part of efforts to ease the burden of rising fuel prices on Nigerians, the Presidency has said.

Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy, disclosed this in a statement on Thursday, explaining that the arrangement was designed to cushion the effects of fluctuations in global crude oil prices on vulnerable households.

“The Nigerian National Petroleum Company (NNPC) agreed today to forgo its petrol retail profit margin and sell to Nigerians at cost to cushion the impact of global crude oil price shocks and volatility on vulnerable households,” he said.

“NNPC Retail, which already sells petrol at the lowest price in the market, will offer this new deal within the next 30 days. This means if NNPC’s landing cost is N1300, it will sell fuel to Nigerians, especially commercial vehicles, at the same price.”

According to Onanuga, the temporary arrangement forms part of a package unveiled by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, to mitigate the impact of high petrol prices.

He added that the initiative had the backing of President Bola Tinubu, amid growing concerns over the effect of rising energy costs on households and businesses.

The presidential spokesperson said Oyedele had expressed hope that other petroleum marketers would adopt a similar approach, noting that the recent increases in crude oil and petrol prices were not expected to persist for long.

“Oyedele said he hoped other marketers would take a cue from the NNPC, as the sharp rise in crude and petrol prices is not expected to last long,” the statement reads.

He also stressed that the decision by NNPC to sell petrol without its retail profit margin should not be interpreted as a reversal of the Federal Government’s decision to remove the subsidy regime in May 2023.

“Oyedele was emphatic that NNPC agreeing to sell at a discount must not be misinterpreted as the restoration of petrol subsidy, which ended on May 29, 2023.

In addition, Oyedele announced forward sales of crude to domestic refineries. As production rises and previously committed crude is freed up, this is expected to shield pump prices from global market volatility.

“Oyedele also said the Federal Government is negotiating a ceiling of N1,350 a litre on the ex-gantry or landing cost of petrol, to keep pump prices stable. Where costs rise above the ceiling, refiners and importers will carry the shortfall and recover it later, when crude prices or the exchange rate allow, without breaching the ceiling.”

Under the proposed arrangement, the government is seeking to limit petrol’s ex-gantry or landing cost to N1,350 per litre. The plan is intended to prevent sharp increases in pump prices by allowing refiners and importers to defer the recovery of costs exceeding the agreed threshold until market conditions improve.

The Presidency, however, acknowledged that Nigerians were facing significant economic pressure following the removal of the petrol subsidy but maintained that returning to the previous system was not an option.

Onanuga said the government remained committed to protecting the gains of its economic reforms while ensuring that their benefits reached more citizens.

“Removing the fuel subsidy came at a price. But the alternative has been tried. Nigeria has already lived through that cycle: scarcity, smuggling, a collapsing currency and a fiscal crisis,” Onanuga said.

“We cannot afford to live through it again, least of all in response to a temporary disruption, and at the very moment the results of reform are gathering pace.

“Government is not out to reverse a necessary reform designed to set our country on the path towards sustained prosperity. It is to ensure its gains reach more Nigerians, faster and in more tangible ways. That is our work, and we are committed to doing it.”

The presidential spokesperson further disclosed that the Federal Government was developing a broader package of fiscal interventions aimed at sustainably reducing inflation to single digits in the near term.

The 30-day petrol pricing arrangement comes amid rising fuel costs and renewed calls for measures to reduce the financial burden on households, transport operators and businesses.