The Crude Oil Refiners Association of Nigeria (CORAN) has thrown its weight behind the Federal Government's plan to sell crude oil to local refineries through forward contracts, but it is demanding answers on how refiners and importers will recover costs exceeding the proposed N1,350-per-litre petrol price ceiling. The association warned that without a clear recovery mechanism, the policy could lead to losses and inadvertently reintroduce price controls or subsidies.
CORAN Supports Forward Crude Sales but Raises Key Questions
CORAN spokesperson Eche Idoko told our correspondent on Sunday that forward contracts could provide refiners with more predictable crude supplies and reduce their exposure to fluctuations in international oil prices. However, he stressed that the policy must be transparent, commercially viable, and accessible to all domestic refiners, including modular plants.
“The proposed forward sale of crude to domestic refineries is workable in principle and could provide feedstock certainty and reduce price volatility. However, the critical questions are availability, pricing, transparency and the protection of existing contractual obligations,” Idoko said.
He questioned whether key industry groups, including the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG), supported the proposal. Idoko also asked who would oversee the arrangement and establish its commercial terms, stressing that effective coordination would be essential to its success.
Concerns Over N1,350 Petrol Price Ceiling
The association's concerns come as petrol prices in Abuja have risen to about N1,410 per litre, above the government's proposed N1,350-per-litre ceiling on ex-gantry or landing costs. Last week, Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele confirmed that the government was negotiating the ceiling under a price-modulation arrangement aimed at protecting consumers from sharp changes in global crude prices and foreign exchange rates.
Under the proposal, refiners and importers would initially absorb costs exceeding the ceiling and recover the shortfall when market conditions improve. Idoko expressed reservations about the proposed ceiling, asking how the government arrived at the figure and who would bear the financial burden when production costs exceed the limit.
“On the proposed N1,350 ex-gantry price ceiling, I have serious reservations. How was that figure determined? Who bears the difference when production costs exceed the ceiling, and how will the shortfall be recovered?” he asked.
Fair Access and Coordination Needed
Idoko maintained that the framework must not concentrate benefits among large operators while excluding smaller businesses. He said all domestic refineries, including modular plants, should have access to affordable crude oil under a commercially sustainable arrangement. He called for proper coordination by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
He warned that without a clear explanation of how the difference would be recovered, the policy could reintroduce price controls or subsidy indirectly. Idoko argued that the government should focus on boosting crude oil production, improving feedstock availability, and reducing refining costs rather than relying on administrative price limits.
The association's position highlights the potential challenges of keeping petrol prices within a fixed limit while allowing refiners and marketers to operate on commercial terms. The outcome of these negotiations will determine whether the forward sales plan can achieve its goal of stabilising petrol prices without imposing unsustainable losses on domestic refiners.
