NNPC Gives Up Petrol Profit as FG Moves to Steady Prices

The Nigerian National Petroleum Company (NNPC) Limited will give up its profit margin on petrol and sell at cost as part of measures to protect struggling households from rising global crude oil prices.

Under the plan, NNPC Retail will sell petrol at its landing cost within the next 30 days. If the landing cost is N1,300 a litre, that is the pump price, with commercial vehicles a key target. 

President Bola Ahmed Tinubu backs the move, which is part of a wider set of measures announced on Thursday by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

“This is not a subsidy”

Oyedele said NNPC’s decision must not be read as a return of the petrol subsidy, which ended on May 29, 2023. He urged other marketers to follow NNPC’s lead and said the current rise in crude and petrol prices is not expected to last.

He also said the government is negotiating a ceiling of N1,350 a litre on the ex-gantry or landing cost of petrol to keep pump prices stable. When costs go above the ceiling, refiners and importers will carry the shortfall. They will recover it later, when crude prices or the exchange rate allow, without breaching the cap.

“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them,” Oyedele said. “1,400 naira a litre today and 1,400 tomorrow is better than 1,500 today and 1,300 tomorrow, because volatility itself adds to uncertainty and cost. And when fares rise sharply, they rarely fall as fast.”

The ceiling will be reviewed monthly and reset when costs require it. The figures will be published so the public can see them.

Crude for local refineries, fewer road levies

The government will also make forward sales of crude to domestic refineries. As production rises and previously committed crude is freed up, this is expected to protect pump prices from swings in the global market.

Under the 2025 tax reform laws, the Federal Government is working with the states and security agencies to cut back road taxes and levies that push up transport fares and logistics costs. It is also putting more money into cash transfers for the most vulnerable households and subsidised credit for small businesses and consumers.

Excess profit tax for price gougers

The government is considering an excess profit tax on operators anywhere in the energy value chain who take undue advantage of consumers. Money from the tax will be used only to ease the impact of fuel prices, through transport support or vouchers for urban minimum-wage earners. The government will also work with the National Assembly on more tax relief for low-income earners under the 2027 Finance Bill.

Strategic fuel reserve

To protect the country from future energy shocks, the Federal Government is investing in a National Strategic Fuel Reserve. Refined products will be released into the market under clear, published rules whenever a global disruption or hoarding threatens supply and stable prices.

Officials said the reserve does not fix prices and is not a subsidy. They said it is meant to prevent artificial scarcity, discourage market manipulation and secure long-term energy supply.

CNG, red tape and traffic

The government is expanding compressed natural gas (CNG) use with the states. CNG is 60 to 70 per cent cheaper than petrol, and the government expects transporters to pass the savings on through lower fares.

Regulatory costs that raise the cost of doing business, and the prices of goods and services, will be cut.

Traffic agencies will improve traffic flow in major cities to reduce fuel use. NIPOST’s newly launched address codes are expected to make deliveries more efficient and cheaper.

‘We cannot afford to live through it again’

The Presidency admitted the hardship high fuel costs are causing. It insisted that bringing back a blanket subsidy would trade long-term harm for a short-term fix.

“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,” the statement 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.”

It added that the government’s aim is not to reverse the reform but “to ensure its gains reach more Nigerians, faster and in more tangible ways.”

The Federal Government also said it is preparing a full package of fiscal measures to bring inflation down to single digits, sustainably, in the near term.