Oyedele Clarifies, Says 𝐍𝐍𝐏𝐂 D𝐢𝐬𝐜𝐨𝐮𝐧𝐭, Commercial Decision, N𝐨𝐭 S𝐮𝐛𝐬𝐢𝐝𝐲

*Says no public fund committed to initiative

*CSJ prescribes 50% annual cut of PMS subsidy

Ndubuisi Francis in Abuja

The Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, has clarified that the newly-introduced discount on petroleum motor spirit (PMS) was purely a decision by the Nigerian National Petroleum Company Limited (NNPCL) to forfeit its retail profit margin and not subsidy.
In a statement issued by the Ministry of Finance, Friday, the minister explained that initiative is a commercial decision taken by the state oil company without public funds being committed.
He stated that a retail margin discount happens when a marketer voluntarily reduces its profit margin, or temporarily gives it up entirely, to lower the price paid by consumers.
The minister said, “𝘛𝘩𝘦 𝘥𝘪𝘴𝘤𝘰𝘶𝘯𝘵 𝘭𝘰𝘸𝘦𝘳𝘴 𝘱𝘳𝘪𝘤𝘦𝘴 𝘧𝘰𝘳 𝘤𝘰𝘯𝘴𝘶𝘮𝘦𝘳𝘴 𝘢𝘯𝘥 𝘤𝘢𝘯 𝘴𝘵𝘳𝘦𝘯𝘨𝘵𝘩𝘦𝘯 𝘕𝘕𝘗𝘊 𝘙𝘦𝘵𝘢𝘪𝘭’𝘴 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 𝘢𝘯𝘥 𝘱𝘳𝘰𝘧𝘪𝘵𝘴 𝘢𝘵 𝘵𝘩𝘦 𝘴𝘢𝘮𝘦 𝘵𝘪𝘮𝘦.
“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.
“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.”
Providing further clarification, he stated:
“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 — 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.”
By constrast, he noted that subsidy involves government financing part of the product’s cost with public funds.
According to him, the cost of the discount is borne by the retailer alone, adding that the initiative did not represent a reversal of the government’s petroleum pricing reforms.
NNPCL Retail, he further said, continues to purchase petrol from the Dangote Refinery and other suppliers at prevailing market prices on commercial terms before applying its retail margin to determine the pump price.
However, he said under the NNPC template, the discount is being absorbed by the company’s retail margin, leaving the pump price reflective of market conditions.
He differentiated the initiative from a situation in which crude oil belonging to the Federation is sold below market value to reduce domestic petrol prices.
Such an arrangement, he argued, would effectively transfer the cost to public revenue.
The government, he stated, was committed to the removal of fuel subsidy and would continue to pursue alternative measures to ease the impact of high petrol prices on households and businesses without returning to a system that placed the financial burden on public resources.
Oyedele also deflated concerns that reducing the company’s retail margin would necessarily result in lower profits for NNPC Limited and, consequently, reduced dividend payments to the Federation, adding that the reduction in earnings per litre could be offset by increased sales volumes as motorists patronised the company’s stations in response to the lower prices.
Meanwhile, the Centre for Social Justice (CSJ) has argued that the announcement by the federal government’s initiative on price modulation mechanism to ensure that petrol price stabilises at not more than N1,350 falls short of the expectations of Nigerians who desire a reasonable relief that reduces the hardship.
A statenent issued by CSJ’s Lead Director, Eze Onyekpere said Nigerians were buying petrol at about N800 before the start of the America-Israel-Iran war, adding that the expectation is that any relief measure should revert fuel price to the N800 figure with a sequenced detailed plan to further reduce the price between N400-N500 per litre in the medium term.
He argued that the proposed reduction is possible through the following measures:

• Set a domestic price cap regime for crude oil indexed on the desired official policy price per litre of different petroleum products and the Nigerian standard of living. This will produce a price lower that the international price of crude oil.
• Empirically determine the number of barrels per day needed by local refineries to satisfy Nigeria’s refined petroleum product needs. Take cognisance of the fact that crude oil produces over 21 derivatives – more than petrol, diesel, kerosene and aviation fuel.
• Deliver crude oil to local refineries at the reduced price.
• Ensure that refined products are not smuggled or diverted away from Nigeria. Just meticulously police the borders.
• Concession the four NNPC refineries to core investors with technical, financial and managerial capacity to start immediate refining of crude oil.
• Recover all monies stolen under the pretext of turn around maintenance of the refineries, especially the $3billion stolen under the Muhammadu Buhari regime.
  Considering that the federal government recently declared a savings of N15.8 trillion between June 2023 and December 2025, translating to N6.32 trillion a year, he argued that if the government cuts the subsidy by 50 per cent, it would amount to a forfeited revenue of N3.16 trillion a year.
  According to him, an expenditure or forfeited revenue of N3.16 trillion a year (by all the tiers of Government in Nigeria) that reduces fuel prices by 50 per cent is an investment greater than any imaginary illusionary macroeconomic indicator achievement.
  “There is an alternative to the complete removal of fuel subsidy and corruption. A country that forfeits and waives N34trn import duties in a year cannot complain about N3.12trn expenditure to reduce the misery, suffering and hardship imposed on citizens by the full removal of fuel subsidy,” he said.