Tinubu Govt Denies Returning Fuel Subsidy, Says NNPC 30-Day Petrol Discount Funded From Retail Margin
Tinubu Govt Denies Returning Fuel Subsidy, Says NNPC 30-Day Petrol Discount Funded From Retail Margin
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the clarification in a statement issued on Friday.
The Nigerian Government has denied claims that its recently announced 30-day petrol price discount at the Nigerian National Petroleum Company Limited (NNPCL) Retail filling stations amounts to a return of fuel subsidy, insisting that no public funds are being used to finance the price discount.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the clarification in a statement issued on Friday.
According to Oyedele, the discount, which took effect on October 1, is being funded entirely from NNPC Retail Limited’s retail margin and not from the federal budget or the Federation Account.
The minister said motorists have been paying less for petrol at NNPC Retail stations following the company’s decision to reduce its retail margin.
He said the measure was designed to provide relief to households, commuters and transporters while strengthening NNPC Retail’s commercial position.
“Some commentators have described the discount as a return of fuel subsidy. That is not correct,” Oyedele said.
He explained that a margin discount occurs when a retailer voluntarily reduces its profit margin or temporarily sells without a margin, passing the savings to consumers.
“A margin discount means the retailer chooses to take a smaller margin, or no margin at all for a period, and passes the savings to the customer. The cost of the discount is borne by the retailer alone,” the minister said.
Oyedele contrasted the arrangement with the fuel subsidy regime abolished by President Bola Tinubu’s administration in 2023.
“A subsidy is different. It is when the government pays part of the price the consumer would otherwise pay. That money comes from public revenue — funds that would otherwise go to salaries, schools, hospitals and infrastructure,” he said.
The minister insisted that the government had no intention of returning to the former subsidy regime.
He said NNPC Retail purchases petrol from the Dangote Refinery and other suppliers at market prices and on commercial terms before adding its retail margin to determine the pump price.
According to him, the current discount is deducted from that retail margin, meaning that the discounted price remains market-reflective.
Oyedele also warned that using crude oil belonging to the federation to artificially reduce petrol prices would amount to a subsidy because any resulting shortfall would ultimately be borne by public revenue.
The minister further defended NNPC Retail’s decision to offer the discount, saying the company was established as a petroleum marketing and retail business to promote the nationwide availability, distribution and affordability of refined petroleum products.
“NNPC Retail Limited, a wholly owned subsidiary of NNPC Limited, began operations over 20 years ago as a petroleum marketing and retail company,” he said.
“Its purpose, in other words, is to keep products available across the country and to moderate retail prices, not necessarily to maximise retail profit.”
Oyedele said NNPC Retail had historically sold petrol below the prices charged by some other marketers, arguing that the latest discount was consistent with the company’s commercial role.
He also rejected concerns that the reduced retail margin would necessarily translate into lower profits for NNPC Limited and reduced dividends to the federation.
According to him, selling larger volumes at a lower margin could offset the reduction in profit per litre.
“A smaller margin or temporary zero margin on each litre can be more than offset by selling more litres over time,” he said.
He added that lower prices could attract customers and strengthen customer loyalty, potentially increasing NNPC Retail’s overall profitability and the dividends eventually paid to the Federation.
The minister described margin discounts as a routine commercial strategy used by retailers globally.
Oyedele also dismissed concerns that the discount could encourage petrol smuggling into neighbouring countries.
He said the retail margin on petrol was less than five per cent of the pump price, arguing that a discount within that margin would not significantly widen the price difference between Nigeria and neighbouring countries.
According to the minister, petrol prices in neighbouring countries are already between 20 and 40 per cent higher than in Nigeria.
“It therefore creates no new incentive for smuggling, and no distortion of the kind that subsidy regimes produced in the past,” he said.
The minister said the government recognised that high fuel prices continued to put pressure on Nigerian households and businesses.
He said the NNPC Retail discount was only one of several measures being implemented by the administration to reduce the impact of high energy and transportation costs.
Other measures, according to him, include the expansion of compressed natural gas (CNG) transportation, the waiver of taxes and duties on petrol, and the removal of illegal levies that increase transportation costs.
“Each is designed to bring relief without returning Nigeria to a subsidy regime that the country can no longer afford,” Oyedele said.
The clarification comes amid renewed public debate over the Nigerian government’s 30-day petrol price discount announced for NNPC stations, with opposition figures and critics questioning whether the measure represents a disguised return of fuel subsidy.
The government, however, maintains that the latest intervention is a commercial decision by NNPC Retail rather than a government-funded subsidy.
