Refiners back forward crude sales, oppose petrol price cap

The Crude Oil Refiners Association of Nigeria has supported the Federal Government's strategy to sell crude oil to local refineries through forward contracts, but cautioned against implementing a petrol price cap without clarifying how costs exceeding the limit would be recovered. While forward sales could provide refiners with feedstock and mitigate exposure to fluctuating international oil prices, the association emphasized the need for transparency, commercial sustainability, and equal access for all local refineries.

Petrol prices in Abuja have risen to around N1,410 per litre, surpassing the government's proposed N1,350-per-litre ceiling on the ex-gantry or landing cost of the product. The government is currently negotiating a N1,350-per-litre ceiling under a price-modulation scheme aimed at protecting consumers from sudden fluctuations in global crude oil prices and exchange rates.

Under this scenario, refiners and importers would initially bear the costs beyond the ceiling, with the shortfall to be recovered when market conditions improve. The Minister of Finance and coordinating minister of the economy, Taiwo Oyedele, announced that the Federal Government would also sell crude forward to domestic refineries to shield pump prices from global market volatility as production increases and previously committed crude becomes available.

CORAN spokesperson, Eche Idoko, raised concerns over the supply commitments, pricing mechanism, and implementation of the forward sales proposal, questioning the government's commitment to providing sufficient crude volumes and ensuring the arrangement benefits all refineries equitably.