The Crude Oil Refiners Association of Nigeria (CORAN) has backed the Federal Government’s plan to sell crude oil to domestic refineries through forward contracts but raised concerns over the proposed N1,350-per-litre petrol price ceiling, demanding clarity on how costs above the limit would be recovered.
The association said forward crude sales could provide local refiners with more predictable feedstock supplies and reduce their exposure to volatile international oil prices. However, it stressed that the arrangement must be transparent, commercially sustainable and accessible to all domestic refineries, including modular operators.
CORAN’s position comes as petrol prices in Abuja have risen to about N1,410 per litre, above the government’s proposed N1,350-per-litre ceiling on the ex-gantry or landing cost of the product.
Last week, the Federal Government confirmed that it was negotiating the proposed price ceiling under a price-modulation arrangement intended to cushion consumers against sharp fluctuations in global crude oil prices and exchange rates.
Under the proposal, refiners and importers would initially absorb costs above the ceiling and recover the shortfall when market conditions improve.
CORAN Questions How Petrol Price Ceiling Will Work
Speaking with our correspondent on Sunday, CORAN spokesperson Eche Idoko said the proposed forward sale of crude oil to domestic refineries was workable in principle but raised questions about crude availability, pricing, transparency and the protection of existing contractual obligations.
“The proposed forward sale of crude to domestic refineries is workable in principle and could provide feedstock certainty and reduce price volatility. However, the critical questions are availability, pricing, transparency and the protection of existing contractual obligations,” Idoko said.
He also questioned whether major industry groups had endorsed the arrangement and how the government intended to administer it.
“Have OPTS and IPPG bought into this arrangement? Who will administer it, and under what commercial terms?” he asked.
Idoko said the government must ensure that the proposed framework did not favour large-scale refineries at the expense of smaller operators.
“I have consistently advocated affordable crude access for all domestic refineries, including modular refineries, not just the big operators. Any framework must be inclusive, commercially sustainable and properly coordinated by NUPRC and NMDPRA,” he said.
The comments highlight concerns over how the government will distribute available crude supplies among domestic refiners while maintaining existing commercial commitments.
CORAN Warns Against Hidden Petrol Subsidy
While supporting the forward-sale proposal, Idoko expressed reservations about the proposed N1,350-per-litre price ceiling, questioning how the figure was determined and who would bear the financial burden if production costs exceeded the limit.
“On the proposed N1,350 ex-gantry price ceiling, I have serious reservations. How was that figure determined? Who bears the difference when production costs exceed the ceiling, and how will the shortfall be recovered?” he asked.
He warned that efforts to stabilise petrol prices could inadvertently reintroduce price regulation or subsidies if the government failed to establish a clear cost-recovery mechanism.
“While price stability is desirable, we must be careful not to reintroduce price regulation or subsidy through the back door,” Idoko said.
The CORAN spokesperson argued that the government should focus on increasing crude oil production, improving access to feedstock and reducing refining costs rather than relying on administrative controls to determine refined petroleum product prices.
Under the proposed arrangement, refiners and importers would initially absorb costs above the price ceiling and seek to recover the difference when market conditions improve. However, questions remain over how the mechanism would operate and how long businesses would be expected to carry the financial burden.
FG Says Crude Forward Sales Could Cushion Fuel Prices
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said the Federal Government would sell crude oil forward to domestic refineries as part of efforts to reduce the impact of international market volatility on local fuel prices.
According to Oyedele, increased production and the release of previously committed crude volumes could help shield domestic petrol prices from fluctuations in the global market.
“Forward sales of crude to domestic refineries. As production rises and previously committed crude is freed up, this would shield pump prices from volatility in the global market,” he said.
The proposal comes amid renewed debate over whether Nigeria can supply enough crude oil to meet the needs of its domestic refineries while fulfilling existing contractual obligations.
Oyedele recently explained that Nigeria’s crude oil production of about 1.8 million barrels per day did not mean the Federal Government had an equivalent volume available for domestic allocation.
He said production-sharing contracts, joint-venture arrangements, production costs and royalties reduced the volume of crude available to the government.
“The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” Oyedele said during an interview on Channels Television’s Politics Today.
The minister’s explanation underscores a key challenge facing the proposed forward-sale arrangement: securing sufficient crude volumes for domestic refiners without disrupting existing contractual commitments.
Petroleumprice.ng CEO Welcomes Forward-Sale Proposal
Meanwhile, the Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, welcomed the government’s proposed forward sales, describing the move as a response to industry concerns about rising crude prices and their effect on domestic fuel costs.
“I am happy that the Federal Government has decided to listen to experts’ advice that there must be a form of intervention through crude supply to the refineries. These forward sales to local refineries are a good move,” Olatide said.
He said the arrangement could ease pressure on refiners and strengthen their bargaining position when negotiating crude supply prices.
“It is definitely going to help and ease the pressure on refineries and, with that, I think better negotiation, better price. It is good and shows the government is listening to what stakeholders are doing and taking the right steps, controlling the effect of crude oil prices to the Nigerian downstream market,” he added.
The proposed forward-sale framework is intended to improve feedstock planning for domestic refiners and reduce the extent to which changes in international crude prices affect the local downstream petroleum market.
However, its effectiveness will depend on the volume of crude made available, the commercial terms governing supply and the treatment of costs that exceed the proposed price ceiling.
Petrol Prices Rise to N1,410 Per Litre in Abuja
The debate over the proposed ceiling comes as filling stations across Abuja and its environs have increased their retail prices of Premium Motor Spirit (PMS), commonly known as petrol.
A market survey by our correspondent on Sunday showed that MRS outlets increased their pump price by N39 per litre, from N1,370 to N1,409.
The new price was being implemented at MRS stations in Kubwa, Katampe, Gwarinpa and other parts of the Federal Capital Territory.
Ranoil and AA Rano also increased their petrol prices by N10 per litre, from N1,400 to N1,410. Nipco sold petrol at N1,410 per litre, while MRS retailed the product at N1,409 per litre.
The prevailing pump prices illustrate the difference between the proposed N1,350 ex-gantry ceiling and the final price paid by consumers. Retail prices also reflect distribution expenses and retail margins, among other costs.
As the government considers the proposed price-modulation framework, refiners are calling for clear rules on crude allocation, pricing and cost recovery to ensure that any intervention is commercially viable and does not place an unsustainable burden on operators.
For CORAN, the central issue is whether forward crude sales can improve feedstock security and support price stability without introducing an unclear system of price controls or hidden subsidies.