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 warned that the proposed petrol price ceiling could reintroduce price regulation or subsidy obligations if the government fails to clarify how excess costs will be covered.
CORAN spokesperson, Eche Idoko, said the arrangement could provide feedstock certainty, reduce exposure to international price volatility and improve planning for domestic refiners.
However, he stressed the need for transparency in crude availability, pricing and contractual terms, adding that the framework must accommodate both large-scale and modular refineries.
“The proposed forward sale of crude to domestic refineries is workable in principle and could provide feedstock certainty and reduce price volatility,” Idoko said.
He also questioned whether key industry groups, including the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG), had endorsed the arrangement.
On the proposed N1,350-per-litre ceiling on ex-gantry or landing costs, Idoko questioned how the figure was determined and who would bear the difference if actual supply costs exceeded the prescribed limit.
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“While price stability is desirable, we must be careful not to reintroduce price regulation or subsidy through the back door,” he warned.
Idoko called for improved domestic crude production, reliable feedstock supplies and lower refining costs, arguing that these measures would provide a more sustainable solution to rising petrol prices.
The proposal also faces crude supply constraints. Finance Minister Taiwo Oyedele recently said Nigeria’s production of about 1.8 million barrels per day did not translate into an equivalent volume available for government allocation, citing existing contractual commitments, production costs and royalties.
“The reality is that today we do not have up to 700,000 free crude to give anyone, including Dangote,” Oyedele said.
Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, welcomed the forward-sale proposal, saying it could ease pressure on refiners and improve their bargaining power in crude procurement.
However, the success of the arrangement will depend on adequate crude availability, transparent pricing, and a clear mechanism for recovering costs above the proposed ceiling without undermining the commercial viability of domestic refineries.
