Finance Minister Taiwo Oyedele says the proposed ceiling is aimed at reducing petrol price volatility without restoring subsidies.
The federal government is negotiating a N1,350-per-litre ceiling on the ex-gantry or landing cost of petrol as part of measures to stabilise pump prices.
Finance Minister Taiwo Oyedele disclosed this on Thursday at a news conference on petrol subsidy in Abuja, saying the government also plans to introduce a system of “price modulation”.
Under the arrangement, pump prices would not immediately reflect every change in global crude prices or the exchange rate.
“The government is negotiating a ceiling of 1,350 naira a litre on the ex-gantry or landing cost of petrol, to keep pump prices stable,” Oyedele said.
He explained that when costs rise above the ceiling, refiners and importers would carry the shortfall and recover it later when crude prices or the exchange rate become more favourable.
“This is neither a subsidy nor a price control: it is designed to smooth prices over time rather than suppressing them,” he said.
Oyedele said maintaining more stable prices would provide greater certainty for households and businesses than frequent sharp increases and reductions.
He noted that when transport fares rise significantly, they rarely fall at the same pace when fuel prices decline.
The minister said the ceiling would be reviewed monthly and adjusted when necessary, with the figures published for transparency.
As part of efforts to protect consumers and businesses from future energy shocks, Oyedele said the government was also investing in a national strategic fuel reserve.
He said refined products would be released into the market under clear and published rules whenever global disruptions or hoarding threaten supply and price stability.
“This is not a subsidy and it does not fix prices, rather it secures supply and reduces price volatility,” Oyedele said.
According to him, the reserve would help prevent artificial scarcity, discourage market manipulation and strengthen long-term energy security while allowing the deregulated market to support stable growth.
Oyedele also said the federal government was working with states to accelerate the deployment of compressed natural gas (CNG).
He encouraged transport operators to pass the savings from CNG to passengers through lower fares.
The minister said the government would also consider introducing an “excess profit tax” on operators found to be taking undue advantage of consumers across the energy value chain.
He said proceeds from the tax would be used exclusively to cushion the impact of fuel prices through transport support or vouchers for vulnerable urban minimum-wage earners.
Oyedele added that the government would work with the National Assembly to consider enhanced tax relief for low-income earners under the 2027 Finance Bill.