‘No subsidy, public funds involved’: FG slams critics, defends NNPC petrol discount

The Federal Government has dismissed claims that the recent reduction in petrol prices at Nigerian National Petroleum Company (NNPC) Retail Limited filling stations amounts to a return of fuel subsidy, stressing that no public funds are being used to finance the discount.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the clarification via a statement issued on Friday, October 9, 2026.

Oyedele said the lower pump price introduced by NNPC Retail since October 1 was purely a commercial decision funded by the company’s retail margin.

Oyedele noted that the discount has brought relief to motorists, households, commuters, and transporters, but should not be mistaken for the subsidy regime scrapped by the President Bola Tinubu administration in 2023.

“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,” the minister said.

He noted that a margin discount and a subsidy are fundamentally different, saying subsidies involve government spending public money to reduce fuel prices, a policy he said the current administration had ended.

Oyedele 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.”

Oyedele also clarified that the petrol discount is neither funded from the federal budget nor the federation account.

He said: “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 nation’s crude below market price would amount to a subsidy, because the shortfall would be borne by public revenue.”

The minister further defended NNPC’s pricing strategy, saying the company was established 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,” Oyedele said.

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Responding to concerns that lower retail margins could reduce NNPC’s contributions to the federation, Oyedele argued that the opposite could happen.

He also dismissed fears that the lower petrol price could encourage fuel smuggling or distort the market.

The minister added that the petrol discount forms part of broader measures by the federal government to cushion the impact of high fuel prices, including the expansion of compressed natural gas (CNG) transport, tax and duty waivers on petrol, and the removal of illegal levies that increase transportation costs.

Oyedele said: “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.

“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.”