FG to Sell Crude Forward to Refiners, Cap Petrol Landing Cost at ₦1,350

By: Tunji Okunlola

The Federal Government says it will 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 product.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced the plan on Thursday at a press briefing in Abuja on petrol prices and subsidy-related issues. He said the arrangement is meant to keep petrol prices stable, and stressed that it is neither a subsidy nor 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,” he said. “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.”

Under the proposal, refineries and importers would absorb any costs above the agreed ceiling and recoup the difference at a later date.

Oyedele also announced plans for the forward sale of crude oil to domestic refineries, as part of efforts to insulate pump prices from swings in the international market. He said the arrangement would let refiners plan their operations with greater certainty on costs.

“As production rises and previously committed crude is freed up, these will shield pump prices from volatility in the global markets,” he said. “So the idea we have 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.”