The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government to introduce a six-month petrol price reduction programme aimed at cutting pump prices by 15 to 20 per cent to ease business operating costs, improve household purchasing power and strengthen the competitiveness of Nigerian enterprises.
The chamber said the proposed petrol price reduction programme should complement the Federal Government’s planned price-stabilisation mechanism, arguing that preventing sudden increases in petrol prices would not be sufficient to address the economic pressures facing businesses and consumers.
The LCCI, while welcoming the government’s proposal to establish a ceiling of N1,350 per litre on the ex-gantry or landing cost of petrol, said the initiative should be accompanied by a clear, measurable and sustainable plan to reduce domestic pump prices.
Its Director-General, Dr. Chinyere Almona said the proposed stabilisation mechanism recognised the impact of fluctuations in international crude oil prices and foreign exchange rates on domestic fuel prices.
However, it maintained that stabilising petrol prices at elevated levels would not provide sufficient relief to businesses already struggling with high energy costs, expensive transportation, rising financing expenses and other structural challenges.
The LCCI proposed that the government work with domestic refiners, petroleum marketers, regulators and other stakeholders to establish a six-month programme targeting a 15 to 20 per cent reduction in petrol pump prices from the prevailing national weighted-average price.
It said the target should be guided by independently verified supply costs, prevailing market conditions and the sustainability of the measures adopted to achieve the reduction.
According to the chamber, the programme should prioritise measures that address the underlying costs of petroleum supply and distribution rather than rely solely on interventions designed to moderate price volatility.
The LCCI noted that Nigerian businesses continued to contend with high electricity tariffs, substantial expenditure on alternative power generation, rising logistics costs and expensive financing, all of which had increased the cost of production and the delivery of goods and services.
It said further increases in petrol prices could compound these pressures, weaken household purchasing power and undermine the competitiveness of local enterprises.
The chamber explained that although the proposed price ceiling could moderate the immediate impact of international oil price and exchange-rate shocks, it would not automatically translate into lower pump prices for consumers.
It therefore urged the government to assess the success of its intervention not only by its ability to prevent sudden price increases but also by its capacity to deliver sustained reductions in energy costs.
As part of its recommendations, the LCCI called for improved and more predictable crude oil supply to domestic refineries through transparent and commercially viable arrangements.
It said reliable access to crude oil could reduce procurement uncertainties, foreign-exchange exposure and avoidable logistics costs, potentially improving the efficiency of domestic refining operations.
The chamber also urged the government to accelerate the deployment of alternative transportation options, including compressed natural gas (CNG) and electric vehicle infrastructure, to reduce the cost of moving goods and people across the country.
It argued that expanding alternative transportation options would help reduce the economy’s exposure to petrol price fluctuations while lowering logistics expenses for businesses.
On distribution costs, the LCCI called for measures to address transportation bottlenecks, improve storage and distribution infrastructure, and eliminate unlawful charges and rent-seeking practices that inflate the final pump price of petrol.
It also stressed the need for greater exchange-rate and macroeconomic stability, noting that petroleum supply costs remained sensitive to movements in the foreign exchange market and international oil prices.
According to the chamber, reducing exchange-rate volatility would improve price predictability and support a more sustainable approach to lowering domestic fuel costs.
The LCCI further cautioned against the potential risks associated with the proposed price-smoothing arrangement, under which refiners and importers could absorb temporary increases in supply costs and recover them when market conditions improve.
It said the arrangement might help smooth price movements but could create deferred cost obligations if the amounts absorbed by refiners and importers were not transparently accounted for and recovered within clearly defined limits.
The chamber warned that poorly managed obligations could eventually exert renewed upward pressure on petrol prices, undermining the relief the policy was intended to provide.
It therefore called for clear rules governing the operation of the stabilisation mechanism, including the conditions for its introduction and withdrawal and the treatment of accumulated cost obligations.
The LCCI said the arrangement must not impose open-ended losses on refiners and importers, discourage private investment or create conditions that could lead to fuel shortages.
It maintained that any intervention should preserve commercial viability while ensuring that consumers and businesses benefit from improved price predictability and lower operating costs.
The chamber also acknowledged that Nigeria could not indefinitely insulate its domestic petroleum market from developments in international crude oil and refined-product markets.
It said a sustainable policy framework must recognise global market realities while addressing domestic inefficiencies that unnecessarily increase the cost of petroleum products.
The LCCI reiterated its support for the government’s efforts to moderate petrol price volatility but insisted that the next phase of the intervention should focus on delivering progressive, transparent and sustainable reductions in pump prices.
It said Nigerian businesses had demonstrated resilience despite persistent operating challenges, but warned that resilience alone could not sustain competitiveness indefinitely.
According to the chamber, lower energy costs, more efficient logistics, commercially viable investments and predictable government policies were essential to improving the business environment, protecting jobs and supporting economic growth.
The LCCI said the ultimate measure of the government’s intervention should be whether businesses spend less on petrol, transportation and distribution, while households experience meaningful relief from the high cost of living.
