The Minister of Finance, Taiwo Oyedele, has said the Nigerian National Petroleum Company Limited’s (NNPC) petrol retail discount is a commercial decision, not a return to fuel subsidy, insisting that the initiative will not reduce revenue accruing to the Federation Account.
Oyedele, in a statement on Thursday, explained that the discount was being funded entirely from NNPC Retail Limited’s profit margin and would not require public funds or government intervention.
He said the distinction between a retail margin discount and a fuel subsidy was crucial, noting that the former involves a retailer voluntarily reducing its profit margin, while the latter requires the government to pay part of the price consumers would otherwise bear.
According to the minister, the current administration ended the fuel subsidy regime in 2023, adding that the policy had not been reinstated.
“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,” Oyedele said.
He explained that NNPC Retail purchases petrol from the Dangote Refinery and other suppliers at prevailing market prices before adding its retail margin to determine pump prices.
“The discount comes out of that margin alone, so the discounted pump price remains market-reflective,” he said.
Oyedele warned that selling the Federation’s crude oil below market value would be fundamentally different, as the resulting shortfall would effectively amount to a subsidy borne by public revenue.
The minister also dismissed concerns that the discount could reduce dividends paid to the Federation, arguing that lower margins per litre could be offset by increased sales volumes and improved customer loyalty.
He said the strategy could ultimately boost NNPC Retail’s profitability and the dividends accruing to the government, describing the arrangement as potentially beneficial to both consumers and the Federation.
According to Oyedele, NNPC Retail was established more than two decades ago to promote the nationwide availability and distribution of petroleum products while moderating retail prices.
He noted that the company had historically sold petrol at prices below those of some competing marketers, adding that the latest discount was consistent with its commercial role.
Discount Won’t Fuel Smuggling, Says Minister
Oyedele also rejected concerns that the temporary price reduction could encourage petrol smuggling into neighbouring countries or distort the domestic market.
He said retail margins account for less than five per cent of the pump price, meaning a discount within that margin would not significantly widen the price difference between Nigeria and neighbouring countries, where petrol prices are reportedly 20 to 40 per cent higher.
According to him, the limited reduction would not create the additional incentives for smuggling associated with previous fuel subsidy arrangements.
The minister’s comments followed a statement by the Presidency on Thursday that NNPC had agreed to suspend its petrol retail profit margin and sell the product at cost for the next 30 days.
