The Federal Government has announced plans to introduce a price-modulation mechanism aimed at stabilising petrol prices, with a proposed ceiling of N1,350 per litre 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 on petrol prices and subsidy-related issues in Abuja.
Oyedele said the proposed arrangement was designed to cushion consumers from fluctuations in the cost of petrol, stressing that it would not amount to a subsidy or price control.
“We are introducing price modulation. The government is negotiating a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol to keep the price stable,” he said.
Under the arrangement, refineries and fuel importers would absorb costs above the agreed ceiling and recover the difference at a later time.
“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,” the minister said.
Oyedele 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 prices on petrol costs.
According to him, the arrangement would enable local refiners to plan their operations with greater certainty while helping to promote stability in petrol prices.
“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.
He explained that as domestic crude production increases and previously committed volumes become available, the measures would help insulate petrol prices from volatility in the international market.
“So the idea we have is an idea that is sustainable. You can sell your crude forward,” the minister added.
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