…Says ceiling is temporary ‘shock absorber,’ to shield commuters from wild price swings, permanent transport fare hikes
By Yinka Giwa
The Presidency on Sunday shed more light on the Federal Government’s ₦1,350-per-litre petrol price ceiling, insisting that the intervention is neither a return to fuel subsidy nor an attempt to impose permanent price controls on Nigeria’s deregulated downstream petroleum market.
It also launched a blistering attack on former Vice President Atiku Abubakar over his criticism of the measure, accusing him of exploiting the current global energy crisis for political advantage and promoting what it described as an economically unsustainable alternative.
Special Adviser to the President on Media and Public Communications, Dr Sunday Dare, said the ₦1,350 ceiling should instead be understood as a temporary “structural shock absorber” designed to protect Nigerian consumers and the wider economy from extreme fluctuations in international crude oil and petroleum product prices.
In a statement on Sunday, Dare said the intervention was part of a broader price-modulation arrangement negotiated with operators to smooth out sudden increases rather than restore the old subsidy system abolished by President Bola Tinubu.
Under the framework, according to the Presidency, refiners and importers would absorb short-term costs above the ₦1,350 ex-gantry ceiling and recover them when international crude prices ease or other cost variables, including the exchange rate, become more favourable.
The government argues that such an arrangement would provide greater stability for households, businesses, and transport operators than allowing pump prices to rise and fall sharply with every movement in international energy markets.
Dare said the major concern was the impact of sudden petrol price increases on transportation costs, noting that commercial transport fares frequently rise immediately after increases in petrol prices but rarely return to previous levels when fuel prices subsequently decline.
“The ceiling protects commuters from permanent hikes in transport prices,” he said, adding that the mechanism would be reviewed monthly on the basis of cost audits to prevent the accumulation of hidden government liabilities.
The Presidency also clarified the separate 30-day NNPC Retail intervention, under which the company will temporarily forgo its retail profit margin and sell petrol at cost.
According to Dare, the initiative originally emerged from a discount offered by NNPC to mark Nigeria’s 66th Independence anniversary and has now been extended for another 30 days as the government moves to cushion households against the impact of the current international energy shock.
He rejected Atiku’s characterisation of the arrangement as a disguised restoration of petrol subsidy.
Dare said the critical difference was that the Federal Government was not returning to the previous system of making open-ended subsidy payments to marketers.
Instead, NNPC Retail would temporarily surrender its own profit margin while the broader price-modulation mechanism seeks to spread extreme price movements over time.
“When NNPC Retail agrees to sell fuel at landing cost for 30 days during an unprecedented global crude price spike, it is not writing cheques to opaque import cartels,” Dare said.
“It is leveraging its corporate balance sheet to absorb short-term global volatility.”
The Presidency consequently accused Atiku of “demagoguery” for attacking measures it said were designed principally to prevent Nigerians from bearing the full and immediate impact of global petroleum market disruptions.
Dare argued that governments elsewhere were also deploying different measures to cushion consumers against energy price shocks, saying Nigeria’s intervention should therefore be considered against the background of exceptional conditions in the international market.
He also took aim at Atiku’s advocacy of what the former Vice President has described as a “production subsidy,” insisting that the proposal does not adequately account for the structure of Nigeria’s crude oil ownership and production agreements.
According to the Presidency, Nigeria currently produces about 1.8 million barrels of crude oil daily, but the Federal Government does not have unfettered ownership of the entire volume.
It explained that production costs, royalties, and contractual obligations under Joint Ventures and Production Sharing Contracts substantially reduce the volume directly available to the government.
Citing explanations by Coordinating Minister of the Economy and Minister of Finance Taiwo Oyedele, Dare said fewer than 700,000 barrels per day could effectively be regarded as unencumbered crude available to the state after contractual obligations.
The Presidency argued that this makes it unrealistic to assume that the government could simply supply all domestic refiners with heavily discounted crude without consequences for public revenues and existing contractual commitments.
It warned that attempting to subsidise crude indiscriminately could recreate opportunities for arbitrage, round-tripping, and the fiscal leakages associated with the former petrol subsidy regime.
Dare said the government was instead pursuing a combination of short-term consumer protection and longer-term structural solutions.
These, he said, include expansion of Compressed Natural Gas infrastructure as a cheaper alternative for commercial transportation, domestic refining, naira-for-crude arrangements, and measures intended to strengthen Nigeria’s strategic energy security.
The Presidency said CNG could ultimately reduce dependence on petrol, particularly in mass transportation, because of its substantially lower operating cost.
Dare also defended the economic reforms introduced since Tinubu assumed office in May 2023, saying the removal of petrol subsidy and reform of the foreign exchange market were necessary responses to serious structural weaknesses in the economy.
He said savings from the old subsidy arrangement had helped increase resources available to the three tiers of government through the Federation Account Allocation Committee, while deregulation had helped eliminate the prolonged petrol queues and recurring supply shortages that previously characterised the downstream sector.
The administration, he added, had simultaneously expanded social interventions, credit programmes, and infrastructure investment as part of efforts to cushion the effects of the reforms and build a more productive economy.
Dare listed cash transfers to vulnerable households, credit facilities for small businesses, wage support, road and rail infrastructure, and the development of domestic refining capacity among measures being pursued by the government.
He accused Atiku of attempting to turn temporary economic difficulties arising from global energy pressures into an electoral weapon ahead of the 2027 presidential election.
The Presidency maintained that restoring a broad subsidy system—whether described as a consumption or production subsidy—without identifying sustainable funding and sufficient crude volumes could return Nigeria to the fiscal pressures the Tinubu administration had sought to eliminate.
Dare said the choice confronting Nigeria was therefore not simply between high and low petrol prices, but between managing temporary global price shocks within a deregulated market and returning to an open-ended subsidy regime carrying potentially enormous fiscal liabilities.
He said Tinubu had opted for what the Presidency described as a combination of market deregulation, temporary price smoothing, CNG expansion, domestic refining, and fiscal discipline.
“The Nigerian electorate is far too sophisticated to trade long-term national economic security for Atiku’s shallow, short-term demagoguery,” Dare declared.
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