- Government Would Rely On Targeted Policy Measures Instead Of Intervening Directly In Fuel Pricing-Edun
The Federal Government has dismissed mounting calls to reintroduce petrol price controls amid global oil markets reeling from the ongoing US–Iran conflict.
TheMatrix Newspaper had in an exclusive report noted that Nigerians are again staring at high petrol prices at the pumps, even as international crude oil prices have sharply fallen.
A few weeks ago, a brief crude oil surge of around 25% was cited by oil marketers, including Dangote Refinery, as justification to hike Premium Motor Spirit (PMS) prices by up to 30%.
However, when the price of international crude oil crashed, it took the report from TheMatrix Newspaper to force a reduction of N100 from the refinery.
To ensure that Nigerians are not short-changed and exploited, the Crude Oil Refinery Owners Association of Nigeria (CORAN) called for the adoption of a domestic crude oil pricing framework that would allow local refineries to access crude at more realistic prices, saying such a move would help stabilise fuel costs and shield Nigerians from global oil market volatility. The association said removing freight and insurance components from the pricing structure for crude supplied to Nigerian refineries would significantly lower feedstock costs and enable local refiners to produce petroleum products at more stable and affordable prices.
In a policy statement sent out by the Publicity Secretary of CORAN, Eche Idoko, the group said the proposed pricing model had become more urgent in view of growing geopolitical tensions in the Middle East, particularly involving Iran, which are already affecting global oil markets. ccording to the association, adopting a pragmatic domestic pricing structure would help insulate the Nigerian economy from external shocks that often trigger spikes in the cost of refined petroleum products.
“The Crude Oil Refinery Owners Association of Nigeria believes that adopting a fair and pragmatic crude oil pricing framework for domestic refineries can significantly insulate Nigerians from the price volatility currently being triggered by the ongoing tensions in the Middle East, particularly the conflict involving Iran,” the refiners said.
It explained that one of the key elements of the proposed framework would be the creation of a domestic crude pricing mechanism that excludes freight and maritime insurance costs, noting that locally supplied crude does not incur such charges. “A key element of such a framework would be the establishment of a domestic crude pricing mechanism that excludes freight and insurance components, similar to the structure under which benchmark crudes such as Brent and WTI are traded.
“Since locally supplied crude does not require international shipping, freight charges, or maritime insurance costs, removing these elements from the pricing formula would allow crude to be supplied to Nigerian refineries at a more competitive and realistic domestic price,” CORAN advised.
The association noted that such an adjustment could significantly reduce the cost of crude feedstock for domestic refineries, making it easier for them to supply refined products to the local market at competitive prices. “CORAN maintains that this adjustment alone could reduce the effective cost of crude feedstock to domestic refineries by a significant margin, enabling local refiners to produce petroleum products, particularly diesel, petrol, and aviation fuel, at more stable and affordable prices for the Nigerian market,” the body added.
Reacting, the Federal Government reaffirmed its commitment to market-based petrol pricing, saying it will not introduce price controls despite rising geopolitical tensions in the Middle East that have heightened volatility in global oil markets.
The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said this during an interview aired on Wednesday on Politics Today on Channels Television.
According to the minister, the administration would explore alternative ways to ease the cost-of-living pressure on Nigerians rather than reversing key market reforms.
“Rather than now reverting back and taking a backward step, we will look at every other measure that can help the cost of living of Nigerians without resorting to non-market pricing,” Edun said.
He explained that the Tinubu administration’s economic strategy is anchored on market-driven pricing for petroleum products and foreign exchange, reforms introduced to eliminate distortions that had persisted for years. “It is the market price. That is what has been instilled by Mr President that was missing for so long, market pricing of petroleum products,” he added.
Edun said that although the conflict in the Middle East could influence global oil prices, the government would rely on targeted policy measures instead of intervening directly in fuel pricing. Asked whether authorities might step in if petrol prices surge sharply, he maintained that intervention would only happen under extreme circumstances.
“Normally, given the policies and philosophy of this government, it would always have to be a last resort,” he said.
The minister pointed to Nigeria’s growing domestic refining capacity as a major buffer against external energy shocks, noting that local production could now meet the country’s fuel demand.
According to him, Nigeria consumes roughly 50 million litres of petrol daily, and domestic refiners, including the Dangote Refinery and other emerging facilities, have indicated their ability to supply that volume.
“Our demand is about 50 million litres per day, and the refiners say they can meet that demand, so we are in a relatively strong position,” Edun said.
He added that investments in refining have strengthened Nigeria’s ability to manage global disruptions that have forced some countries to ration fuel supplies.
“At this time, the resilience that the Nigerian economy has is coming largely from the fact that we do have that investment in refining,” he noted.
As part of measures to reduce transport costs, the government is also expanding its compressed natural gas initiative.
“One of the ways the President immediately announced was 100,000 extra CNG conversion kits to enable vehicles to convert to CNG fuel, which is maybe 25 to 30% of the cost of petrol,” Edun said.
Despite the benefits of higher oil prices for revenue, the minister cautioned that geopolitical tensions also bring downside risks.
“You have gains on one side from higher oil prices, but you also have costs on the other side, particularly freight and other supply chain disruptions,” he explained.
