Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said the 30-day petrol discount introduced by NNPC Retail is not a return to the fuel subsidy regime.
In a statement on his X account on Friday, Oyedele said the discount is funded entirely from NNPC Retail’s profit margin and uses no public funds.
Motorists have paid less for petrol at NNPC Retail stations since October 1, 2026, after the company cut its retail margin.
The minister welcomed the relief for households, commuters and transporters, but said it should not be confused with the subsidy the Federal Government abolished in 2023.
He explained that a margin discount happens when a retailer reduces or forgoes part or all of its profit to lower prices for customers. A subsidy, he said, involves government paying part of a product’s cost from public revenue.
According to him, NNPC Retail buys petrol from the Dangote Refinery and other suppliers at market prices, then adds its margin to arrive at the pump price.
“The cost of the discount is borne by the retailer alone,” he said, adding that the discounted pump price remains market-reflective.
Oyedele contrasted the arrangement with selling Federation-owned crude oil below market price, which he said would be a subsidy because public revenue would bear the shortfall.
He also defended the margin cut as consistent with NNPC Retail’s mandate to ensure the availability, distribution and affordability of refined petroleum products nationwide.
The company, a wholly owned subsidiary of NNPC Limited, was set up more than 20 years ago as a petroleum marketing and retail business and has historically sold petrol at lower prices than other marketers, he said.
Oyedele described the current discount as a commercial decision open to any retailer, meant to relieve consumers while supporting the company’s business.
On fears that the lower margin could hurt NNPC Limited’s profits and dividends to the Federation, he argued that higher sales volumes and customer loyalty could offset the reduced earnings per litre.
The strategy could ultimately raise NNPC Retail’s profits and the dividends paid to the Federation, he said, benefiting both consumers and government.
He also dismissed concerns that the discount could distort the domestic fuel market or encourage smuggling into neighbouring countries.
The retail margin, he said, accounts for less than five per cent of the pump price, so a discount within it is unlikely to widen significantly the price gap with neighbouring countries, where petrol is already 20 to 40 per cent more expensive.
The minister said the initiative would not create the market distortions associated with earlier subsidy regimes.
He added that the government recognises the burden of high fuel prices on households and businesses, and that the discount is one of several measures to ease it.
The others, he said, include expanding compressed natural gas (CNG) transport, waiving taxes and duties on petrol, and removing illegal levies that raise transport costs.
Oyedele said the measures are meant to provide relief without returning the country to a subsidy regime he described as no longer affordable.
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