The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, has said that the retail discount sale of fuel by the Nigerian National Petroleum Company Limited (NNPCL) is not a subsidy.
He provided the clarification in a statement in Abuja, today.
According to him, “𝘛𝘩𝘦 𝘥𝘪𝘴𝘤𝘰𝘶𝘯𝘵 𝘭𝘰𝘸𝘦𝘳𝘴 𝘱𝘳𝘪𝘤𝘦𝘴 𝘧𝘰𝘳 𝘤𝘰𝘯𝘴𝘶𝘮𝘦𝘳𝘴 𝘢𝘯𝘥 𝘤𝘢𝘯 𝘴𝘵𝘳𝘦𝘯𝘨𝘵𝘩𝘦𝘯 𝘕𝘕𝘗𝘊 𝘙𝘦𝘵𝘢𝘪𝘭’𝘴 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 𝘢𝘯𝘥 𝘱𝘳𝘰𝘧𝘪𝘵𝘴 𝘢𝘵 𝘵𝘩𝘦 𝘴𝘢𝘮𝘦 𝘵𝘪𝘮𝘦.
“Since 1 October 2026, motorists have been paying less for petrol at NNPC Retail Limited stations, 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. Here, plainly, is what the discount is and what it is not.”
𝐌𝐚𝐫𝐠𝐢𝐧 d𝐢𝐬𝐜𝐨𝐮𝐧𝐭 𝐚𝐧𝐝 𝐚 s𝐮𝐛𝐬𝐢𝐝𝐲 a𝐫𝐞 n𝐨𝐭 𝐭𝐡𝐞 s𝐚𝐦𝐞
“Every marketer adds a margin to the price it pays for the fuel it sells. 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.
“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.
𝐍𝐨 p𝐮𝐛𝐥𝐢𝐜 m𝐨𝐧𝐞𝐲 p𝐚𝐲𝐬 𝐟𝐨𝐫 𝐭𝐡𝐞 d𝐢𝐬𝐜𝐨𝐮𝐧𝐭
“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 adds its retail margin to set the pump price. The discount comes out of that margin alone, so the discounted pump price remains market-reflective.
“This is quite different from crude oil owned by the Federation. Selling the nation’s crude below market price would amount to a subsidy, because the shortfall would be borne by public revenue.”
𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 n𝐨𝐭 e𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐭𝐨 r𝐞𝐝𝐮𝐜𝐞 𝐅𝐞𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐬
The Minister added that the NNPCL discount would nor affect Federation dividends the company would not lose any revenue.
Mr. Oyedele said further, “Some have asked whether a lower margin means lower profits for NNPCL, and so lower dividends to the Federation. It need not. A smaller margin or temporary zero margin on each litre can be more than offset by selling more litres over time.
“And a discount builds customer loyalty that lasts well beyond the discount period itself. Together, these can raise NNPC Retail’s profits, and the dividends paid to the Federation: a win-win for consumers and for government. Margin discounts are a routine commercial strategy, used by retailers the world over.
𝐃𝐢𝐬𝐜𝐨𝐮𝐧𝐭 won’𝐭 d𝐢𝐬𝐭𝐨𝐫𝐭 m𝐚𝐫𝐤𝐞𝐭 𝐨𝐫 e𝐧𝐜𝐨𝐮𝐫𝐚𝐠𝐞 s𝐦𝐮𝐠𝐠𝐥𝐢𝐧𝐠
“The retail margin on petrol is less than 5 percent of the pump price. A discount within that margin cannot meaningfully widen the gap between prices in Nigeria and in neighbouring countries, where petrol already costs 20 to 40 percent more. It therefore creates no new incentive for smuggling, and no distortion of the kind that subsidy regimes produced in the past.”
The bottom line, according to the minister is that, “ 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.“
