Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has stated that the 30-day petrol discount introduced by the Nigerian National Petroleum Company Limited (NNPC) Retail is not a return of fuel subsidy.
Oyedele earlier announced at a press conference that Nigerians would buy petrol at lower prices at Nigerian National Petroleum Company Limited (NNPCL) filling stations for the next 30 days.
In a statement on Friday, the Minister explained what the 30-day petrol discount means.
He said the discount was funded entirely from NNPC Retail’s profit margin and did not involve public funds.
The minister welcomed the relief the initiative offers households, commuters and transporters but said it should not be confused with the fuel subsidy regime abolished by the Federal Government in 2023.
He explained that a margin discount occurs when a retailer reduces or temporarily forgoes part or all of its profit margin to lower prices for customers, while a subsidy involves the government paying part of a product’s cost using public revenue.
According to him, NNPC Retail buys petrol from the Dangote Refinery and other suppliers at market prices, then adds its retail margin to set pump prices.
“The cost of the discount is borne by the retailer alone,” he said, adding that the discounted pump price remained market-reflective.
Oyedele distinguished the arrangement from selling crude oil owned by the Federation below market prices, which he said would amount to a subsidy because the shortfall would be borne by public revenue.
The minister also defended NNPC Retail’s decision to reduce its margin, describing it as consistent with the company’s mandate to ensure the nationwide availability, distribution and affordability of refined petroleum products.
He said the company, a wholly owned subsidiary of NNPC Limited, was established more than 20 years ago as a petroleum marketing and retail business and had historically sold petrol at prices below those of other marketers.
Oyedele said the current discount was a commercial decision available to any retailer and was intended to provide relief to consumers while supporting the company’s business.
On concerns that the reduced margin could affect NNPC Limited’s profits and dividends to the Federation, the minister argued that increased sales volumes and customer loyalty could offset the lower earnings per litre.
He said the strategy could ultimately increase NNPC Retail’s profits and the dividends paid to the Federation, benefiting both consumers and the government.
