Presidency Says NNPC Has Agreed To Forgo Retail Profit, Sell Petrol At cost

The Nigerian National Petroleum Company (NNPC) Limited has agreed to suspend its petrol retail profit margin and sell the product at cost for 30 days as the Federal Government moves to cushion the impact of rising global crude oil prices on Nigerians.

The Presidency announced the measure on Thursday, saying it was designed to ease the burden of escalating fuel costs on vulnerable households and other consumers, particularly commercial transport operators.

Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy, disclosed the development in a statement, explaining that the intervention had the backing of the President.

According to Onanuga, NNPC Retail, which the Presidency described as selling petrol at the lowest price in the market, would implement the arrangement over the next 30 days.

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He explained that the company would sell petrol at its actual cost without adding its retail profit margin.

“For instance, if NNPC’s landing cost is ₦1,300, it will sell fuel to Nigerians, especially commercial vehicles, at the same price,” Onanuga said.

The announcement forms part of a package of measures unveiled by Taiwo Oyedele, Minister of Finance, to mitigate the effects of rising petrol prices and volatility in the international crude oil market.

Oyedele reportedly expressed hope that other fuel marketers would adopt a similar approach, arguing that the current surge in crude oil and petrol prices was not expected to persist for long.

The Presidency, however, cautioned against interpreting NNPC’s decision to forgo its retail profit margin as a return to the petrol subsidy regime abolished on May 29, 2023.

According to the government, the intervention is a temporary market measure intended to provide relief to consumers without reversing the petroleum sector reforms introduced by the Tinubu administration.

As part of the broader strategy, Oyedele also announced plans for forward sales of crude oil to domestic refineries, a move expected to improve supply arrangements and reduce the exposure of local petrol prices to fluctuations in the international market.

The government said increased crude oil production could help free up supplies previously committed to other obligations, thereby supporting domestic refining and moderating the impact of global price movements.

Oyedele further disclosed that the Federal Government was negotiating a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol in a bid to prevent sharp increases in pump prices.

Under the proposed arrangement, refiners and importers would bear any shortfall when costs exceed the agreed ceiling and recover the difference later when crude oil prices or the exchange rate become more favourable.

The proposal is intended to keep petrol costs within the negotiated limit without immediately transferring every increase in international prices to consumers.

The Presidency acknowledged that the removal of petrol subsidy had imposed significant economic pressure on Nigerians but maintained that restoring the former system could recreate problems associated with fuel scarcity, smuggling, currency pressures and public finance difficulties.

“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.

He added that the government would not reverse what it described as necessary reforms because of a temporary disruption in the global energy market.

According to him, the administration’s priority is to ensure that the benefits of its economic policies reach more Nigerians more quickly and in tangible ways.

The Presidency also disclosed that the Federal Government was working on a comprehensive package of fiscal measures aimed at sustainably reducing inflation to single digits in the near term.