Petrol discount or subsidy?

The federal government’s decision to offer a 30-day discount on petrol sold through the Nigerian National Petroleum Company Limited (NNPCL) stations has triggered debate on the state of subsidy, how the arrangement will work, who will ultimately bear the cost, among others.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced the measure in Abuja on Thursday at a press briefing tagged, “Fuel prices and the subsidy question.”

Oyedele said the government would offer a discount on petrol dispensed by NNPCL for an initial 30 days, with public transport operators given priority nationwide.

“We are offering a discount on petrol dispensed by NNPC Limited for the next 30 days in the first instance with priority for public transporters nationwide. It’s not a subsidy; the government is saying we sell to you at a cost,” he said.

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The announcement is coming amid renewed pressure over petrol price and its impact on transport fares, household expenses and business operating costs. This is also against the backdrop of some opposition presidential candidates proposing return of subsidy on petrol and cheaper fuel costs.

N1,350 per litre ex gantry ceiling price

Part of the plans of the federal government is to negotiate a ceiling of N1,350 per litre on the ex-gantry cost of petrol in a move aimed at shielding pump prices from fluctuations in global crude oil prices and exchange rates.

However, Oyedele acknowledged that the measures being proposed by the federal government would not completely ease the pressure on households.

“We are introducing price modulation. Pump prices should not have to follow every swing in global crude or exchange rate. The government is negotiating a ceiling of N1,350 a litre on the ex-gantry cost of petrol to keep pump prices stable,” he said.

According to him, where the actual cost rises above the ceiling, refiners and importers would bear the shortfall and recover it later when crude prices or exchange rates become favourable, without breaching the ceiling.

“This is neither a subsidy nor a price control; it is designed to smooth prices over time, rather than suppressing them,” Oyedele said.

He explained that the objective was to prevent sharp swings in pump prices, saying, “The reason is simple: N1,400 a litre today and tomorrow is better than N1,500 today and N1,300 tomorrow, because volatility itself adds to uncertainty and fuels go up sharply; they rarely come down as fast.”

Oyedele said the ceiling would be reviewed monthly, with adjustments made where necessary and the figures published for transparency.

The minister said the government was also working on forward crude sales to domestic refiners, adding that rising production would help shield pump prices from volatility in the international market.

“We’re working with the states across the federation under the new tax laws. We are reigning in the taxes and levies that inflate fuel and logistics costs,” he added.

Oyedele said the government was also increasing funding for cash transfers to vulnerable households and subsidising credit for small businesses and consumers, while working with state governments to accelerate the rollout of compressed natural gas.

On CNG, Oyedele noted that the government would accelerate the deployment of compressed natural gas vehicles across the country.

He said federal and state governments would support the rollout, while transport operators would be encouraged to pass the savings from CNG use on to passengers.

He further announced that “The federal government would consider an excess profit tax for operators found to be taking undue advantage of the situation anywhere along the energy value chain.

“The proceeds will be used exclusively to cushion the impact of fuel prices through transport support or vouchers for urban minimum wage earners who are the most vulnerable. The government also plans to work with the National Assembly on enhanced tax relief for low-income earners under the 2027 Finance Bill.”

Not a return to subsidy – Presidency

Meanwhile, the Special Adviser to the President on Information & Strategy, Bayo Onanuga, in a statement clarified that the discount is not a return to subsidy.

“This is neither a subsidy nor a price control; it is designed to smooth prices over time rather than suppressing them,” Onanuga’s statement insisted.

The government is further planning forward crude sales to domestic refineries as local production increases, a move expected to reduce exposure to fluctuations in international oil prices.

It also announced an accelerated rollout of compressed natural gas (CNG), with the government expecting transport operators to pass the resulting savings to passengers. According to the Presidency, CNG is 60–70 per cent cheaper than petrol.

In addition, the government plans to establish a National Strategic Fuel Reserve to help protect the economy against future supply disruptions and price shocks. Refined products would be released under published rules during periods of disruption, hoarding or artificial scarcity, Daily Trust gathered.

Independent marketers seek inclusion

Reacting to the development, independent marketers under the aegis of the Independent Petroleum Marketers Association of Nigeria (IPMAN) said they must benefit from the initiative.

National Publicity Secretary of IPMAN, Chinedu Ukadike, in a chat with one of our correspondents said IPMAN members must be carried along in the initiative by ensuring that they get the discounted prices directly from NNPCL.

He said, “We don’t know how they want to achieve that. We also want to enjoy that benefit. NNPCL should be giving us products at that same rate so that there will be no confusion.”

He stated that implementing the plan without carrying along the marketers would amount to putting the cart before the horse.

PETROAN backs move, urges inclusion too

Also, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) welcomed the move, describing it as a timely intervention aimed at reducing the burden of high fuel cost on Nigerians.

The National President of the association, Dr. Billy Gillis-Harry, said the decision reflected the government’s willingness to consider measures outside conventional approaches to ease the economic hardship facing households and businesses.

“From the computations we have made, and as part of the push that PETROAN has been making, the government needs to think outside the box to reduce the suffering of Nigerians,” he said.

According to him, the president’s decision to provide temporary relief showed that the government was listening to concerns from stakeholders.

However, the PETROAN president called for wider distribution of the discounted petrol to ensure that the benefit reaches consumers across the country.

He urged the government to allocate between 30 and 40 per cent of the discounted product to PETROAN-affiliated retail outlets, rather than concentrating supplies at NNPCL stations.

“30 to 40 percent of this product should be spread to PETROAN retail outlet stations so that we can deeply penetrate the system, the whole country, and ensure that there are no queues,” he said.

Addressing concerns about possible confusion in implementing the arrangement, he said he did not expect significant difficulties because the NNPCL already supplies petroleum products to different retail outlets under established commercial arrangements.

The PETROAN president said the arrangement should help improve affordability for Nigerians during the 30-day period, while giving government and industry stakeholders time to develop longer-term measures.

‘The intervention must be transparent, monitored’

Prof. Wumi Iledare, Professor Emeritus of Petroleum Economics and Executive Director of the Emmanuel Egbogah Foundation, said there is an economic rationale for targeting public transporters rather than providing cheaper petrol universally.

He argued that the policy objective should be to reduce transportation costs, which could in turn reduce logistics costs and inflationary pressure while protecting vulnerable households.

“I actually see a defensible economic rationale for targeting public transporters rather than giving every motorist cheaper petrol,” Iledare said.

However, he stressed that the success of the intervention would depend on whether the benefit actually reaches passengers.

“If a transporter receives cheaper petrol but passengers continue paying the same fare, the public does not receive the intended welfare gain,” he said.

Iledare said the government should disclose the discount per litre, the volume covered, the total fiscal exposure and the mechanism for ensuring that transport operators pass the benefit to commuters.

He also called for the publication of the actual cost of the intervention, volumes sold and its financial impact at the end of the 30-day period.

In his view, the key issue is not what the government chooses to call the policy but who bears the cost and who receives the benefit.

“I would call it a subsidy-equivalent risk unless the incidence is demonstrated otherwise,” he said.

Iledare stated that if the government wanted temporary relief without reopening the previous subsidy structure, the intervention should be targeted, time-bound, transparent, independently auditable and fiscally capped.

He also cautioned that the policy should not undermine competition in the downstream petroleum market by turning NNPCL into a government-directed price setter.

Analyst sees ‘disguised’ subsidy

Oil and gas industry analyst, Dr Marcel Okeke, described the arrangement as a potential return of subsidy in another form.

According to Okeke, if the government negotiates with fuel importers and absorbs part of their landing costs, importers would effectively be able to sell petrol at a lower price than the prevailing market cost.

He questioned how such an arrangement would affect domestic refiners, particularly the Dangote refinery, if imported petrol benefiting from government support became cheaper.

Okeke said the government could either have to extend a similar arrangement to domestic refiners or risk creating an uneven competitive environment.

He also questioned the sustainability of the 30-day intervention.

“For now, the arrangement is only for the next 30 days. What happens after those 30 days? That is the big question,” he said.

Okeke linked the timing of the intervention to the broader political environment, arguing that the government would want to demonstrate measures capable of easing the cost-of-living pressures confronting Nigerians.

He noted that transport costs affect the prices of goods and services across the economy. Lowering transportation costs, he said, could therefore have a wider effect on household expenses.

The petrol intervention has also renewed questions about the government’s compressed natural gas programme.

Okeke recalled that the president met with state governors in August and that expectations had been raised that CNG-powered transport would help reduce transportation costs by October.

However, he argued that the rollout required not only vehicles but also adequate CNG infrastructure distributed across the country.

Abandon ‘insensitive’ policies, NLC tells FG

The leadership of the Nigeria Labour Congress (NLC), on Thursday advised the federal government to jettison what it described as its “insensitive policies that have allowed indiscriminate hikes in the price of petroleum products”.

The Congress said the government cannot continue to demand sacrifice from workers while not offering any relief to the suffering masses and workers.

It stated these in a communique issued after the joint meeting of the National Executive Council (NEC) and Central Working Committee (CWC) and read to journalists by the President of NLC, Joe Ajaero, at Labour House, Abuja.

The NLC said the exorbitant pump price of petrol has had a cascading effect on the cost of transportation, food, and other essential goods, further deepening the hardship of workers and the masses.

“The joint meeting reiterates its call on the federal government to work with relevant agencies to immediately reduce the price of Premium Motor Spirit (PMS), commonly known as petrol.

“The government must abandon its insensitive policies that have allowed for indiscriminate hikes in the price of petroleum products which has only served to enrich a handful of oil marketers while pauperising the masses,” Ajaero said.

The labour leader revealed that the joint meeting-in-session noted with profound alarm the deepening misery inflicted on the Nigerian working class and the broader masses by the “neo-liberal policies of the federal government and its state institutions.”

The NLC president added, “Inflation continues to soar unabated, the naira remains traumatised, wages have been rendered worthless, and the cost of living has become unbearable.

“The ruling elite, acting as enforcers of global monopoly capital, have demonstrated a worrying indifference to the suffering of the people, choosing instead to transfer the burden of their fiscal negligence onto the already impoverished working masses thus abandoning the people to the dictates of comprador fat cats.”

ADC rejects intervention

The African Democratic Congress Presidential Campaign Council (ADC-PCC) has criticised the government’s announcement, describing the 30-day petrol discount as a political intervention rather than a sustainable economic policy.

In a statement issued on Thursday, the council’s Director of Media and Publicity, Kola Ologbondiyan, said Nigerians would reject what he described as a “one-month bribe.”

The ADC-PCC questioned what would happen after the 30-day period and whether Nigerians would return to paying prevailing pump prices once the intervention expires.

“What happens after 30 days? Will Nigerians return to buying petrol at over N1,400 per litre?” Ologbondiyan asked.

He argued that the government had subjected Nigerians to prolonged economic hardship following the removal of petrol subsidy and other economic reforms.

The council also credited its presidential candidate, Atiku Abubakar, with advocating changes to fuel subsidy policy and argued that the latest intervention supported its position that petrol costs could be reduced.

The criticism comes as political parties and presidential contenders begin positioning themselves ahead of the 2027 general elections. The ADC-PCC said temporary relief would not address broader concerns about inflation, unemployment, declining purchasing power and living costs.

Also speaking, former Vice-President and ADC presidential candidate Atiku Abubakar condemned the proposal.

In a statement issued by Phrank Shaibu, Atiku’s spokesman, the opposition leader said the Tinubu administration’s “attempt to dangle a fuel subsidy as bait for Nigerians was reckless, disgraceful and scandalous”.

He said the same government had watched Nigerians “endure excruciating hardship without offering meaningful relief.

“Now, as the election draws closer, President Tinubu is dangling a temporary discount at the very epicentre of the cost-of-living crisis that has tormented households and businesses.

“Atiku totally rejects this calendar-scheduled, election-laced subsidy package. Nigerians are not fools to be offered a month of discounted fuel after years of punishing prices and then expected to forget the hardship when the discount expires. This is shameless and heartless,” he said.

Atiku said the proposed 30-day discount was not an economic plan but a political bandage on a wound the government had helped create.

“What happens on Day 31? Nigerians wake up to the same brutal prices, the same punishing transport fares and the same rising cost of food. The government cannot manufacture relief for one month and expect Nigerians to applaud while the hardship remains,” he said.

He noted that the offer is limited to NNPCL stations, while the government has yet to state how much motorists will save per litre or guarantee that any savings for transport operators will be passed on to passengers through lower fares.

The former Vice President said the administration’s sudden reversal was itself an admission of guilt over the hardship Nigerians have endured.

“This volte-face proves that the production-support proposal I have advanced is workable, achievable and not complicated. The Tinubu government and its spin doctors have tried to make it sound impossible, yet they are now reaching for a temporary subsidy-style intervention because the pain has become impossible to ignore,” Atiku said.

He reiterated his proposal for capped and budgeted production support tied to fuel refined in Nigeria, with safeguards to ensure that the benefit reaches consumers and supports local refining.

Makinde/Daura Presidential Campaign Organization kicks

The Makinde/Daura Presidential Campaign Organization (MDPCO), under the platform of the Allied Peoples Movement APM has described the discount as “offensive and provocative attempt to beguile Nigerians.”

Richard Ihediwa, Director of Strategic Communications of the MDPCO in a statement said, “It is a slap on the faces of the suffering citizens that at the time they expected an impactful reduction in the astronomically high pump price of petrol, the Tinubu government came out on national media to announce an infinitesimal and ‘microscopic’ discount.”

The campaign questioned why the Tinubu administration which was quick in carrying out “geometric” increase in the price of petrol by up to 733% is now embarking on arithmetic ratio in decrease.

“It is indeed appalling that a government that deliberately caused an inexplicable increase in the pump of petrol is now embarking on an insulting reduction that cannot add value but rather create wide division amongst the people.”

Ihediwa said the fact that the reduction will only be at NNPCL stations and for a period of one month “clearly shows that the Tinubu administration has come to its wits end and become bereft of solutions”.