The Federal Government has announced plans to implement a petrol price-modulation system that will place a proposed ₦1,350 per litre cap on the ex-gantry or landing cost of the product.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday at a press briefing in Abuja on petrol pricing and subsidy-related matters.
According to Oyedele, the initiative is intended to promote stability in petrol prices, adding that the arrangement should not be interpreted as either a subsidy or price control measure.
“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.
The minister disclosed that under the proposed arrangement, refineries and importers would absorb any costs above the agreed ceiling and recover the difference later.
The minister also announced plans for the forward sale of crude oil to domestic refineries as part of efforts to shield petrol prices from volatility in the international market.
He said the arrangement would allow refiners to plan their operations and provide greater certainty over 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.