FG says NNPC’s 30-day petrol discount is not return to fuel subsidy

The Federal Government has defended the Nigerian National Petroleum Company Limited’s decision to offer a temporary discount on petrol, insisting that the initiative does not amount to a return of the fuel subsidy regime.

Minister of Information and National Orientation Mohammed Idris said the 30-day initiative is intended to provide temporary relief to Nigerians amid rising energy costs.

According to the government, NNPC Retail will absorb the reduction by giving up part of its normal retail profit margin rather than relying on public funds to cover the difference in petrol prices.

Finance officials have also maintained that no money from the Federal Government’s budget or the Federation Account will be used to finance the discount.

How the NNPC petrol discount works

Under the arrangement, NNPC Retail will continue purchasing petrol from suppliers at market prices.

The company will then reduce or temporarily surrender part of the retail margin it would ordinarily add before selling the product to consumers.

The Federal Government argues that this makes the initiative fundamentally different from the previous petrol subsidy system, under which public revenue was used to cover part of the cost of fuel.

Public transport operators are expected to receive priority during the 30-day programme.

The government says the measure is designed to provide some relief to motorists without reversing the petrol subsidy removal introduced in May 2023.

Government rejects subsidy concerns

The initiative has generated debate among political figures, labour representatives and other stakeholders, some of whom have questioned its duration, financial implications and overall effect on the cost of living.

Former Vice President Atiku Abubakar is among those who have criticised the arrangement and questioned how its cost would be reflected in NNPC’s finances.

The government, however, maintains that NNPC is making a commercial decision to accept a smaller profit margin.

Officials have argued that lower pump prices could attract more customers and increase sales volumes, potentially helping NNPC offset the reduction in the amount earned on each litre sold.

The 30-day discount comes as Nigerians continue to face the impact of high transport and energy costs.