The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, has dismissed claims that the Nigerian National Petroleum Company Limited’s retail petrol discount amounts to a return of fuel subsidy.
Oyedele insisted that the initiative is entirely commercially funded without the use of public money.
He said the discount, introduced at NNPC Retail Limited stations on October 1, was financed by reducing the company’s retail profit margin rather than drawing from government revenue, adding that the arrangement could provide relief to consumers while strengthening the company’s profitability.
The minister, in a statement issued in Abuja on Friday, explained that the discount was fundamentally different from the former fuel subsidy regime, under which government paid part of the cost of petrol to keep pump prices artificially low.
He stressed that the administration had ended that arrangement in 2023 and was not returning to it.
According to him, NNPC Retail purchases petrol from the Dangote Refinery and other suppliers at market prices before adding its retail margin to determine pump prices.
He said the current discount was absorbed entirely by the company’s margin, allowing motorists to pay less without transferring the cost to the Federal Government or the Federation Account.
“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,” Oyedele said.
The minister explained that NNPC Retail, a wholly owned subsidiary of NNPC Limited, was established more than two decades ago to support the nationwide availability, distribution and affordability of petroleum products.
He noted that the company’s mandate extended beyond maximising retail profits to helping moderate prices and ensuring that fuel remained available across the country.
Oyedele also dismissed concerns that the discount could reduce the dividends paid by NNPC Limited to the Federation, arguing that lower margins per litre could be offset by increased sales volumes and stronger customer loyalty.
According to him, the strategy could ultimately improve the company’s overall profitability and support higher dividend payments to the government.
“A smaller margin or temporary zero margin on each litre can be more than offset by selling more litres over time,” he said, adding that the approach was a routine commercial strategy used by retailers globally.
On concerns that the discount could encourage cross-border smuggling or distort the domestic petroleum market, Oyedele said the retail margin represented less than five per cent of the pump price.
He argued that reducing a margin of that size would not significantly widen the existing price difference between Nigeria and neighbouring countries, where petrol prices were already 20 to 40 per cent higher.
The minister maintained that the discount would therefore not create the kind of market distortions associated with the previous subsidy regime.
Acknowledging the continued pressure of fuel prices on households and businesses, Oyedele said the discount was one of several measures being pursued by the government to ease the burden on Nigerians.
Other measures, he said, included expanding compressed natural gas, CNG, transport, waiving taxes and duties on petrol, and removing illegal levies that increase transportation costs.
He maintained that the measures were intended to provide economic relief without reviving a subsidy arrangement he described as financially unsustainable for the country.
