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On October 8, 2026, Finance Minister Taiwo Oyedele announced a 30-day petrol discount at NNPC stations, prioritising public transport. He proposed a ₦1,350-per-litre ex-gantry or landing-cost ceiling, with suppliers temporarily absorbing excess costs for later recovery.

I welcome the relief. But why only 30 days instead of a sustained, targeted and elastic productive-energy subsidy until global energy-market disruptions subside or affordable alternatives become widely available? How was the ₦1,350 ex-gantry ceiling determined? Without transparent cost calculations, that ceiling risks becoming an anchor for inflated prices.

Modelling fair fuel prices

At Brent’s $103.36 per barrel and CBN’s ₦1,332.10-per-dollar exchange rate, crude has an international-parity value of ₦137,686 per barrel.

Refining margins measure product values less crude-input costs and cover operating costs, depreciation, financing and returns.

Published 2025 international refining margins provide benchmarks: Repsol (Spain) $7.90, OMV (Austria) $10.10, Valero (US Gulf Coast) $11.84, Phillips 66 (Central Corridor) $13.26 and Marathon (Gulf Coast) $14.82 per barrel. Repsol, Valero and Marathon represent the lowest, middle and highest benchmarks.

We retain the IMF-cited indicative product mix—55 percent petrol, 26 percent diesel and 19 percent aviation fuel—because Dangote’s reported 39.9 percent petrol share lacks corresponding diesel and aviation-fuel percentages. Applying historical relative price weights and 159 assumed saleable litres per barrel yields illustrative ex-gantry prices. Repsol produces approximately ₦817 for petrol, ₦1,139 for diesel and ₦988 for aviation fuel per litre; Valero gives ₦844, ₦1,177 and ₦1,021; and Marathon gives ₦866, ₦1,208 and ₦1,049, respectively.

Allowing ₦60–₦220 per litre for downstream costs and margins, our model suggests pump prices of ₦877–₦1,086. This raises questions about the FG’s proposed ₦1,350 ex-gantry ceiling and Dangote Refinery’s reported ₦1,324 ex-gantry price in early October. Without cost disclosures, how can Nigerians distinguish reasonable returns from excessive pricing?

Domestic refining avoids some freight and offshore handling costs, while lower labour costs partly offset financing constraints. On October 8, average Texas petrol cost $3.659 per US gallon, approximately ₦1,288 per litre, including ₦135 in federal and state petrol taxes. Nigeria’s petrol VAT waiver should favour lower pump prices.

Targeted productive-fuel subsidies

Last week, I showed that energy expenses could consume 56–66 percent of teachers’ salaries, justifying support for teachers and police.

At the modelled petrol pump price of ₦1,000 per litre, beneficiaries could pay ₦700, with government covering ₦300. Assuming 937,000 public-school teachers and 271,800 non-VIP police personnel, monthly allocations of 60 and 30 litres respectively would require 64.374 million litres, costing ₦231.75 billion annually.

Farm mechanisation requires energy. Diesel-powered tractors, harvesters and irrigation pumps cannot readily switch to CNG without rural infrastructure. A Nigerian mechanisation assessment reproduced in a 2024 Japan International Cooperation Agency presentation identified 20,500 functional tractors. If available to commercial farmers, 800 hours annually at 10 litres per hour would require 164 million litres. Reports of idle government-procured tractors make verification essential. Harvesters and irrigation-pumps require separate allowances.

For food-and-livestock haulage, 30,000 illustrative heavy trucks travelling 4,500 kilometres monthly at 35 litres per 100 kilometres would consume 567 million litres of diesel annually. The Federal Road Safety Corps must verify the fleet.

A 2017 survey by the National Bureau of Statistics and Small and Medium Enterprises Development Agency of Nigeria recorded 17,094 small and medium manufacturing enterprises. An illustrative 2,500 litres monthly per enterprise would cover 512.82 million litres annually. Food processors deserve priority, with allocations reflecting verified consumption.

I propose a 50 percent diesel subsidy for agricultural machinery and qualifying food-and-cattle haulage, and 25 percent for manufacturing, including food processing. At an illustrative diesel price of ₦1,300 per litre, annual support would cost ₦106.6 billion for agriculture, ₦368.6 billion for haulage and ₦166.7 billion for manufacturing. Including teachers and police, the programme totals approximately ₦874 billion annually, assuming full utilisation.

On October 9, US President Donald Trump announced an agreement to increase Russian diesel supplies to lower fuel prices for American farmers, ranchers and truckers, illustrating intervention to protect agriculture and food distribution.

Payroll, tax, machinery, vehicle-registration and industry records must validate these assumptions. NIN-linked entitlements, redeemable at participating stations, must…

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