Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has clarified that the 30-day petrol discount introduced by Nigerian National Petroleum Company Limited (NNPC) Retail does not represent a return to fuel subsidy.
Oyedele explained that the initiative was funded entirely from NNPC Retail’s profit margin and did not involve government funds or public revenue.
The minister made the clarification in a statement on Friday following his earlier announcement that Nigerians would enjoy reduced petrol prices at NNPC filling stations for 30 days.
He welcomed the initiative, noting that it would provide temporary relief for households, commuters and transport operators facing the burden of fuel costs.
However, he cautioned against comparing the discount with the fuel subsidy system abolished by the Federal Government in 2023.
According to Oyedele, a retail margin discount occurs when a company reduces or temporarily gives up part or all of its profit margin to offer customers lower prices. A subsidy, on the other hand, involves the government using public funds to cover part of a product’s cost.
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He explained that NNPC Retail purchases petrol from Dangote Refinery and other suppliers at market prices before adding its retail margin to determine pump prices.
Under the current arrangement, he said, the company bears the cost of the discount while the pump price remains reflective of market conditions.
Oyedele further distinguished the initiative from selling federally owned crude oil below market value, explaining that such an arrangement could constitute a subsidy because the financial shortfall would ultimately affect public revenue.
The minister also defended NNPC Retail’s decision to reduce its margin, describing it as consistent with the company’s responsibility to promote the availability, distribution and affordability of petroleum products nationwide.
Addressing concerns that the discount could reduce profits and dividends payable to the Federation, Oyedele argued that increased sales volumes and stronger customer loyalty could compensate for lower earnings per litre.
He said the strategy could ultimately improve the company’s profitability and increase dividends to the government while providing relief to consumers.
The minister maintained that the initiative was a commercial decision rather than a reversal of the government’s fuel subsidy policy.
