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The Minister of Finance and Coordinating Minister for the Economy, Taiwo Oyedele, has clarified that the 30-day petrol price discount introduced by NNPC Retail is not a return to fuel subsidy, saying the reduction is being funded entirely from the company’s profit margin.
Oyedele explained in a statement posted on his X account on Friday that the initiative, which took effect on October 1, was a commercial decision by NNPC Retail to offer temporary relief to motorists without drawing on public funds.
He said the arrangement was different from the fuel subsidy regime abolished by the Federal Government in 2023, under which public revenue was used to cover part of the cost of petrol.
According to the minister, NNPC Retail buys petrol from the Dangote Refinery and other suppliers at prevailing market prices before adding its retail margin to determine pump prices. The current discount involves reducing or temporarily surrendering part or all of that margin.
“The cost of the discount is borne by the retailer alone,” Oyedele said, maintaining that the reduced pump price remained market-reflective.
He explained that a government-funded subsidy would arise if public revenue were used to pay part of the product’s cost. He also cited the sale of Federation-owned crude oil below market prices as an example of an arrangement that could amount to a subsidy because the shortfall would ultimately be borne by public funds.
Defending the initiative, Oyedele said NNPC Retail had a commercial mandate to support the availability, distribution and affordability of refined petroleum products across the country. He added that the company had operated as a petroleum marketing and retail business for more than two decades.
The minister also dismissed concerns that the discount would necessarily reduce NNPC Limited’s earnings and dividends to the Federation. He argued that higher sales volumes and stronger customer loyalty could offset the reduction in earnings per litre and potentially improve the company’s overall profitability.
On fears that the price reduction could encourage petrol smuggling into neighbouring countries or distort the domestic market, Oyedele said NNPC Retail’s margin accounted for less than five per cent of the pump price. He added that petrol prices in neighbouring countries were already 20 to 40 per cent higher than Nigeria’s, arguing that the discount was unlikely to widen the gap significantly.
Oyedele acknowledged that high fuel prices continued to put pressure on households and businesses, but said the government was pursuing other measures to reduce transportation costs, including expanding compressed natural gas (CNG) transport, waiving taxes and duties on petrol, and removing illegal levies that increase the cost of moving goods and people.
He maintained that the 30-day discount was intended to provide temporary relief to consumers without reviving a fuel subsidy system the government considers financially unsustainable.
