The Federal Government has insisted that the petrol discount introduced by the Nigerian National Petroleum Company Limited’s retail arm is not funded with public money, describing it as a commercial decision rather than a return to fuel subsidy.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this in a release issued by the Federal Ministry of Finance in Abuja on Friday, October 9, titled, “The NNPC Retail Discount Is Not a Subsidy: No Public Money Is Involved.”
The clarification followed the Presidency’s announcement that NNPC Retail Limited would temporarily forgo its retail profit margin and sell petrol at cost to cushion households against global oil-price shocks.
The Presidency, in a statement signed by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, said the initiative, backed by President Bola Tinubu, was not a reversal of the subsidy removal in 2023.
Explaining the arrangement, Oyedele said the discount was borne entirely by the retailer through a reduction in its profit margin.
“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.”
He added, “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.”
The minister explained that a subsidy involves government using public revenue to pay part of the price consumers would otherwise bear.
“A subsidy is different. It is when government pays part of the price the consumer would otherwise pay.
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“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,” he said.
Oyedele stated, “The discount is not funded by the federal budget or the Federation Account.”
He said NNPC Retail buys petrol from the Dangote Refinery and other suppliers at market prices before adding its retail margin, which it reduces under the discount arrangement.
The minister also argued that increased sales volumes and customer loyalty could offset the lower margin, potentially sustaining company profits and dividends paid to the Federation.
Addressing smuggling concerns, he said the retail margin accounted for less than five per cent of the pump price, making the discount unlikely to create a significant new incentive for cross-border petrol smuggling.
He listed other government measures to ease fuel costs, including expanding compressed natural gas for transport, waiving taxes and duties on petrol, and removing illegal levies.
“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,” he said.