NNPC retail petrol discount isn’t subsidy, FG clarifies

Abdullateef Fowewe

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has rejected claims that a recent petrol price reduction at NNPC Retail Limited stations represents a return of fuel subsidy, insisting no public funds are involved.

In a press release issued Friday by the Federal Ministry of Finance, Oyedele stated that motorists have been paying less for petrol at NNPC Retail stations since October 1 following a discount on the company’s retail margin.

“We welcome the relief this brings to households, commuters and transporters.

“Some commentators have described the discount as a return of fuel subsidy. That is not correct,” Oyedele wrote.

He drew a clear distinction, “A margin discount means the retailer chooses to take a smaller margin, or no margin at all for a period, and passes the saving to the customer. The cost of the discount is borne by the retailer alone.”

By contrast, he explained, “A subsidy is different. It is when 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. That is the regime this administration ended in 2023, and it is not coming back.”

Oyedele stressed that the discount “is not funded by the federal budget or the Federation Account.”

NNPC Retail buys petrol from the Dangote Refinery and other suppliers at market prices on commercial terms, then applies its retail margin.

“The discount comes out of that margin alone, so the discounted pump price remains market-reflective,” he stressed.

He added that a lower margin need not reduce dividends to the Federation, as higher sales volumes and greater customer loyalty could offset the reduction and potentially increase profits.

The retail margin is less than 5 percent of the pump price, he noted, so the discount should not meaningfully widen the price gap with neighbouring countries or encourage smuggling.

President Bola Tinubu’s administration removed Nigeria’s long-standing petrol subsidy shortly after taking office in 2023, a landmark reform that ended years of heavy fiscal drain but triggered sharp rises in pump prices and living costs.

Prices had recently climbed further amid higher global crude oil costs linked to Middle East tensions, with average pump prices reported around ₦1,400 per litre in some areas.

NNPC Retail, the wholly owned marketing subsidiary of the state oil company NNPC Limited, introduced a discount effective October 1 — initially framed in part as an Independence Day promotion (including a ₦66-per-litre offer in some reports) and later linked to a broader temporary measure under which the retailer forgoes or reduces its margin, with priority for public transporters and targets discussed around ₦1,350 per litre in some government communications.

NNPC has also extended promotional discounts.

Critics have argued the move effectively functions as a subsidy because NNPC is government-owned.

The minister countered that the arrangement remains a commercial decision consistent with NNPC Retail’s historical role of supporting nationwide product availability and moderating prices, without drawing on public revenue.

The government has paired the discount with other steps, including expansion of compressed natural gas (CNG) transport and waivers of certain taxes and duties on petrol.

Oyedele concluded, “A subsidy spends public money to lower the price of fuel. The NNPC Retail discount lowers the price without spending any public money, and it can strengthen NNPC Retail’s business at the same time.”