Minister of Finance Taiwo Oyedele has defended Nigerian National Petroleum Company Limited (NNPC) Retail’s decision to reduce petrol prices for 30 days, insisting that the move does not amount to a return of fuel subsidy.
Oyedele, who also serves as Coordinating Minister of the Economy, said the discount was funded entirely from the company’s profit margin rather than government funds.
The minister made the clarification in a Friday statement following his announcement that consumers would purchase petrol at reduced prices at NNPC filling stations for the next 30 days.
He said the measure would provide temporary relief to households, commuters and transporters without reversing the market-based petroleum pricing system introduced after the removal of fuel subsidy in 2023.
According to Oyedele, a retail margin discount is a commercial arrangement in which a company voluntarily reduces its profit margin to offer customers more affordable prices.
He contrasted this with a subsidy, under which the government uses public revenue to pay part of a product’s cost.
The minister explained that NNPC Retail purchases petrol from Dangote Refinery and other suppliers at market prices before adding its margin to determine the pump price.
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Under the discount arrangement, he said, the company bears the cost of the reduction while maintaining a market-reflective price.
Oyedele further explained that selling crude oil belonging to the Federation below market prices would be a different arrangement because the financial shortfall could ultimately be borne by public revenue.
He said NNPC Retail’s decision was consistent with its responsibility to promote the availability, distribution and affordability of refined petroleum products throughout the country.
The minister noted that the company had been operating as a petroleum marketing and retail business for more than two decades and had previously sold petrol at prices below those charged by some other marketers.
He also responded to concerns that the discount could affect NNPC Limited’s earnings and the dividends it pays to the Federation.
Oyedele argued that reducing the margin per litre could attract more customers, increase sales volumes and strengthen loyalty to NNPC filling stations.
He said higher sales could potentially offset the lower earnings per litre and improve overall profitability.
According to him, the approach could provide consumers with temporary savings while potentially supporting government revenue through increased dividends.
He reiterated that the initiative was a business decision, not a government-funded subsidy programme
