By Stella Odueme
The Independent Media and Policy Initiative (IMPI) has defended the Federal Government’s 30-day petrol retail discount and forward crude-sale arrangement, describing them as temporary measures to cushion the impact of global oil price volatility without reintroducing fuel subsidies.
The policy think-tank also criticised former Vice President and African Democratic Congress (ADC) presidential candidate, Alhaji Atiku Abubakar, over his proposal to restore fuel subsidies, warning that the move could undermine Nigeria’s economic progress.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI described the government’s approach as a time-bound intervention comparable to Germany’s 90-day fuel discount model, which offered a 17-cent reduction and had received commendation from Atiku.
The organisation explained that the 30-day period was designed as a controlled trial rather than a rigid expiration date, arguing that the arrangement would avoid creating new debts or exposing public finances to the huge costs associated with the subsidy model proposed by the former vice president.
Comparing the two approaches, Akinsiju said the Federal Government’s plan relied on market-driven mechanisms and forward pricing, while Atiku’s proposal involved a government-funded production subsidy under which the state would pay refinery owners the difference between actual production costs and the prescribed prices.
He warned that compelling international oil companies and private joint-venture partners to supply equity crude at government-mandated discounted rates could lead to contract breaches, investor flight and costly international arbitration.
According to him, the previous subsidy regime was among the factors that discouraged final investment decisions on new oil and gas projects in Nigeria until the administration of President Bola Tinubu came into office.
IMPI further explained that the petrol rebate was complemented by a forward crude-sale arrangement intended to promote medium-term price stability by supplying crude to domestic refiners at predetermined rates.
The arrangement, it said, was linked to a negotiated petrol landing cost or ex-gantry price ceiling of ₦1,350 per litre.
Akinsiju stressed that the 30-day window was not an isolated measure but an immediate fiscal bridge to provide relief while longer-term structural solutions were developed.
He explained that the ₦1,350-per-litre ceiling was not a permanent price control but a mechanism for smoothing price fluctuations, with the applicable formula reviewed every 30 days.
Under the formula, he said, the landing cost would be determined by multiplying the global Platts benchmark by the naira exchange rate and adding local logistics and port charges.
Akinsiju illustrated the arrangement with a hypothetical scenario in which a geopolitical crisis, such as a conflict in the Strait of Hormuz, pushes the calculated landing cost to ₦1,450 per litre.
In such a situation, he said, refiners would temporarily absorb the ₦100 difference. If global prices subsequently fell and the actual landing cost dropped to ₦1,250 per litre, the retail price would remain at the ₦1,350 ceiling, allowing the ₦100 surplus to offset the previously deferred deficit.
He added that if the exchange rate or global crude oil prices settled permanently at a different level, the steering committee would adjust the baseline ceiling for the following month.
“For instance, shifting it to ₦1,380 or ₦1,300,” he said, explaining that the adjustment would help sustain the arrangement without requiring continuous government funding.
IMPI maintained that the framework was designed to cushion consumers against sudden international price shocks while protecting public finances and maintaining the market-based reforms introduced in the petroleum sector.