By Gabriel Ameh
The Independent Media and Policy Initiative (IMPI) has defended the Federal Government’s 30-day petrol retail discount and forward crude-sale arrangement, describing the measures as temporary tools to cushion the impact of global oil price volatility rather than a return to fuel subsidy.
The policy think-tank also criticised former Vice President Atiku Abubakar’s proposal to restore petrol subsidies, arguing that the approach could place additional pressure on public finances and undermine Nigeria’s ongoing economic reforms.
In a policy statement signed by its chairman, Dr Omoniyi Akinsiju, IMPI described the government’s intervention as a time-bound mechanism designed to provide short-term relief while longer-term measures to stabilise fuel prices are developed.
The organisation compared the initiative with Germany’s 90-day fuel discount programme, which it said Atiku had previously commended.
According to IMPI, the 30-day period should be understood as a controlled trial rather than an automatic expiration date for the policy.
The group argued that the arrangement could help manage temporary price shocks without creating new government debt or exposing public finances to the potentially substantial costs associated with a conventional fuel subsidy.
IMPI Explains Difference Between FG’s Plan and Atiku’s Proposal
Akinsiju said the government’s approach relies on market-linked forward pricing, while Atiku’s proposal would involve a government-funded subsidy to cover the difference between production costs and the price paid by consumers.
Under the model described by IMPI, government payments to refinery owners would be subject to budgetary allocations, explicit limits and auditing.
The organisation warned that requiring international oil companies and private joint-venture partners to supply equity crude at government-mandated discounted rates could lead to contractual disputes, reduced investor confidence and expensive international arbitration.
It also argued that uncertainty surrounding the former fuel subsidy regime had contributed to delays in major investment decisions in Nigeria’s oil and gas sector.
However, these assessments represent IMPI’s position on the competing policy options and were not independently established in the statement.
How the ₦1,350 Petrol Pricing Framework Would Work
IMPI said the 30-day retail rebate would be complemented by a forward crude-sale arrangement intended to provide greater stability for local refiners.
Under the framework outlined by the organisation, crude would be sold to domestic refiners at predetermined rates, alongside a negotiated petrol landing cost or ex-gantry price ceiling of ₦1,350 per litre.
Akinsiju explained that the ceiling would not constitute a permanent price control. Instead, it would serve as a mechanism for smoothing fluctuations in petrol prices, with adjustments reviewed every 30 days.
According to the formula presented by IMPI, the landing cost would be calculated using the Platts international benchmark, the naira exchange rate, local logistics and port charges.
The organisation said the arrangement was designed to limit the immediate impact of sudden changes in international oil prices and foreign exchange rates.
IMPI Gives Example of How Price Fluctuations Could Be Managed
To illustrate the proposed mechanism, Akinsiju used a hypothetical scenario in which geopolitical tensions, including a disruption around the Strait of Hormuz, push the calculated petrol landing cost to ₦1,450 per litre.
Under that example, the difference between the calculated landing cost and the ₦1,350 ceiling would be temporarily absorbed by refiners.
If the landing cost subsequently fell to ₦1,250 per litre, the retail price would remain at the ceiling under the model described by IMPI, allowing the resulting ₦100 difference to offset the earlier shortfall.
The organisation said this balancing mechanism could help the arrangement finance itself over time without requiring a conventional government-funded subsidy.
It added that if international crude prices or the exchange rate shifted permanently into a different range, a steering committee could review the following month’s ceiling.
For instance, the baseline could be adjusted to ₦1,380 or ₦1,300 per litre to reflect changing market conditions.
The figures provided by IMPI illustrate how its proposed pricing mechanism would operate; they do not independently establish the actual costs or prices that consumers will face.
IMPI Says 30-Day Window Is a Bridge to Longer-Term Stability
Akinsiju maintained that the 30-day period was intended to provide an immediate buffer while broader measures to stabilise domestic fuel prices take shape.
He argued that the forward crude-sale arrangement and periodic price reviews could help reduce the effect of temporary international market shocks on Nigerian consumers.
The organisation maintained that the government’s approach differs fundamentally from restoring a traditional petrol subsidy, under which public funds would be used to cover part of the cost of fuel.
The debate highlights the competing approaches to petrol affordability in Nigeria: using market-based pricing mechanisms to manage volatility or deploying direct government spending to reduce the price paid by consumers.
Whether the Federal Government’s framework delivers sustained price stability without transferring significant costs to refiners, consumers or public finances will depend on its implementation, the terms of the crude-sale arrangements and movements in global oil prices and the exchange rate.
Source: Independent Media and Policy Initiative (IMPI), policy statement signed by Chairman Dr Omoniyi Akinsiju.
