0
0
๐๐ฉ๐ฆ ๐ฅ๐ช๐ด๐ค๐ฐ๐ถ๐ฏ๐ต ๐ญ๐ฐ๐ธ๐ฆ๐ณ๐ด ๐ฑ๐ณ๐ช๐ค๐ฆ๐ด ๐ง๐ฐ๐ณ ๐ค๐ฐ๐ฏ๐ด๐ถ๐ฎ๐ฆ๐ณ๐ด ๐ข๐ฏ๐ฅ ๐ค๐ข๐ฏ ๐ด๐ต๐ณ๐ฆ๐ฏ๐จ๐ต๐ฉ๐ฆ๐ฏ ๐๐๐๐ ๐๐ฆ๐ต๐ข๐ช๐ญโ๐ด ๐ฃ๐ถ๐ด๐ช๐ฏ๐ฆ๐ด๐ด ๐ข๐ฏ๐ฅ ๐ฑ๐ณ๐ฐ๐ง๐ช๐ต๐ด ๐ข๐ต ๐ต๐ฉ๐ฆ ๐ด๐ข๐ฎ๐ฆ ๐ต๐ช๐ฎ๐ฆ.
Since 1 October 2026, motorists have been paying less for petrol at NNPC Retail Limited stations, following a discount on the companyโs retail margin. We welcome the relief this brings to households, commuters and transporters.
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.
1. ๐ ๐๐๐ซ๐ ๐ข๐ง ๐๐ข๐ฌ๐๐จ๐ฎ๐ง๐ญ ๐๐ง๐ ๐ ๐๐ฎ๐๐ฌ๐ข๐๐ฒ ๐๐ซ๐ ๐๐จ๐ญ ๐ญ๐ก๐ ๐๐๐ฆ๐
Every marketer adds a margin to the price it pays for the fuel it sells. 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.
A subsidy is different. It is when government pays part of the price the consumer would otherwise pay. That money comes from public revenue โ 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.
2. ๐๐จ ๐๐ฎ๐๐ฅ๐ข๐ ๐๐จ๐ง๐๐ฒ ๐๐๐ฒ๐ฌ ๐๐จ๐ซ ๐ญ๐ก๐ ๐๐ข๐ฌ๐๐จ๐ฎ๐ง๐ญ
The discount is not funded by the federal budget or the Federation Account. NNPC Retail buys petrol from the Dangote Refinery and other suppliers at market prices, on commercial terms, then adds its retail margin to set the pump price. The discount comes out of that margin alone, so the discounted pump price remains market-reflective.
This is quite different from crude oil owned by the Federation. Selling the nationโs crude below market price would amount to a subsidy, because the shortfall would be borne by public revenue.
3. ๐๐๐๐ ๐๐๐ญ๐๐ข๐ฅ ๐๐ฌ ๐๐จ๐ข๐ง๐ ๐๐ก๐๐ญ ๐๐ญ ๐๐๐ฌ ๐๐๐ญ ๐๐ฉ ๐ญ๐จ ๐๐จ
NNPC Retail Limited, a wholly owned subsidiary of NNPC Limited, began operations over 20 years ago as a petroleum marketing and retail company. It was set up to ensure the nationwide availability, distribution and affordability of refined petroleum products.
Its purpose, in other words, is to keep products available across the country and to moderate retail prices, not necessarily to maximise retail profit. It has historically sold fuel below the prices of other marketers. The current discount continues that role, and it is a commercial decision that any retailer is free to make.
4. ๐๐ก๐ ๐๐ข๐ฌ๐๐จ๐ฎ๐ง๐ญ ๐๐ฌ ๐๐จ๐ญ ๐๐ฑ๐ฉ๐๐๐ญ๐๐ ๐ญ๐จ ๐๐๐๐ฎ๐๐ ๐ ๐๐๐๐ซ๐๐ญ๐ข๐จ๐ง ๐๐ข๐ฏ๐ข๐๐๐ง๐๐ฌ
Some have asked whether a lower margin means lower profits for NNPCL, and so lower dividends to the Federation. It need not. A smaller margin or temporary zero margin on each litre can be more than offset by selling more litres over time. And a discount builds customer loyalty that lasts well beyond the discount period itself. Together, these can raise NNPC Retailโs profits, and the dividends paid to the Federation: a win-win for consumers and for government. Margin discounts are a routine commercial strategy, used by retailers the world over.
5. ๐๐ก๐ ๐๐ข๐ฌ๐๐จ๐ฎ๐ง๐ญ ๐๐ข๐ฅ๐ฅ ๐๐จ๐ญ ๐๐ข๐ฌ๐ญ๐จ๐ซ๐ญ ๐ญ๐ก๐ ๐๐๐ซ๐ค๐๐ญ ๐จ๐ซ ๐๐ง๐๐จ๐ฎ๐ซ๐๐ ๐ ๐๐ฆ๐ฎ๐ ๐ ๐ฅ๐ข๐ง๐
The retail margin on petrol is less than 5 percent of the pump price. A discount within that margin cannot meaningfully widen the gap between prices in Nigeria and in neighbouring countries, where petrol already costs 20 to 40 percent more. It therefore creates no new incentive for smuggling, and no distortion of the kind that subsidy regimes produced in the past.
๐๐ก๐ ๐๐จ๐ญ๐ญ๐จ๐ฆ ๐๐ข๐ง๐
.๐จ ๐๐๐๐๐๐ ๐ ๐๐๐๐๐ ๐ ๐๐๐๐๐๐ ๐๐๐๐๐ ๐๐ ๐๐๐๐๐ ๐๐๐ ๐๐๐๐๐ ๐๐ ๐๐๐๐. ๐ป๐๐ ๐ต๐ต๐ท๐ช ๐น๐๐๐๐๐ ๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐ ๐๐๐๐๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐ ๐๐๐ ๐๐๐ ๐๐๐๐๐๐ ๐๐๐๐๐, ๐๐๐ ๐๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐๐ ๐ต๐ต๐ท๐ช ๐น๐๐๐๐๐โ๐ ๐๐๐๐๐๐๐๐ ๐๐ ๐๐๐ ๐๐๐๐ ๐๐๐๐.
We recognise that fuel prices continue to weigh on households and businesses. The discount is one of several measures government is pursuing to ease that burden, alongside the expansion of CNG transport, the waiver of taxes and duties on petrol, and the removal of illegal levies that inflate transport costs. Each is designed to bring relief without returning Nigeria to a subsidy regime that the country can no longer afford.
๐๐๐ข๐ฐ๐จ ๐๐ฒ๐๐๐๐ฅ๐
๐๐ฐ๐ฏ๐ฐ๐ถ๐ณ๐ข๐ฃ๐ญ๐ฆ ๐๐ช๐ฏ๐ช๐ด๐ต๐ฆ๐ณ ๐ฐ๐ง ๐๐ช๐ฏ๐ข๐ฏ๐ค๐ฆ ๐ข๐ฏ๐ฅ ๐๐ฐ๐ฐ๐ณ๐ฅ๐ช๐ฏ๐ข๐ต๐ช๐ฏ๐จ ๐๐ช๐ฏ๐ช๐ด๐ต๐ฆ๐ณ ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐๐ค๐ฐ๐ฏ๐ฐ๐ฎ๐บ
๐๐จ๐ญ๐ ๐ญ๐จ ๐๐๐ข๐ญ๐จ๐ซ๐ฌ: The Ministerโs full speech, ๐๐ถ๐ฆ๐ญ ๐๐ณ๐ช๐ค๐ฆ๐ด ๐ข๐ฏ๐ฅ ๐ต๐ฉ๐ฆ ๐๐ถ๐ฃ๐ด๐ช๐ฅ๐บ ๐๐ถ๐ฆ๐ด๐ต๐ช๐ฐ๐ฏ, is available on the Federal Ministry of Finance website at www.finance.gov.ng.
About the Author
