Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has explained the implications of the 30-day petrol discount introduced by the Nigerian National Petroleum Company Limited (NNPC) Retail, insisting that the initiative is not a return to fuel subsidy.
Oyedele disclosed this in a statement shared on his X platform on Friday, saying the discount was funded entirely from NNPC Retail’s profit margin and did not involve public funds.
Motorists have been paying less for petrol at NNPC Retail filling stations since October 1, 2026, following the company’s decision to reduce its retail margin.
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 the cost of a product using public revenue.
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.
“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, creating benefits for both consumers and government.
Oyedele also dismissed concerns that the discount could distort the domestic fuel market or encourage smuggling into neighbouring countries.
He said the retail margin on petrol accounted for less than five per cent of the pump price, arguing that a discount within that margin was unlikely to significantly widen the price difference between Nigeria and neighbouring countries, where petrol was already 20 to 40 per cent more expensive.
The minister maintained that the initiative would not create the kind of market distortions associated with previous fuel subsidy regimes.
He said the government recognised that high fuel prices continued to weigh on households and businesses, adding that the discount was one of several measures being pursued to ease the burden.
Other measures, according to him, include expanding compressed natural gas (CNG) transport, waiving taxes and duties on petrol, and removing illegal levies that increase transportation costs.
Oyedele said the measures were designed to provide relief without returning the country to a subsidy regime he described as no longer affordable.
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