The Federal Government says fuel subsidy is gone. Yet it is introducing measures to cushion petrol prices, including a 30-day discount at NNPC Retail stations and a proposed ceiling on the cost of petrol supplied by refiners and importers. The relief is welcome. The explanation of how these measures are funded, however, deserves closer scrutiny.
On October 9, Finance Minister Taiwo Oyedele defended the NNPC Retail discount as a commercial decision. The company, he said, would forgo its retail margin and sell petrol at cost. Since no money was being paid from the federal budget, the minister argued, the arrangement was not a subsidy.
The distinction is valid, but incomplete. A retailer can cut its margin to attract customers without receiving government support. A temporary discount by a state-owned company does not automatically constitute a subsidy. The question is whether the discount is genuinely a commercial decision and whether the wider package of government interventions carries costs that the official explanation overlooks.
That question matters because NNPC Limited is wholly owned by the Federation. Section 53(7) of the Petroleum Industry Act 2021 requires the company and its subsidiaries to operate commercially, profitably and efficiently without recourse to government funds. The same provision requires NNPC Limited to declare dividends to its shareholders and retain 20 per cent of profits as retained earnings.
The law does not prohibit a commercially sensible discount. If lower prices attract enough additional customers to increase total earnings, NNPC Retail could benefit. But the Finance Minister has offered no sales projections or financial analysis to support his suggestion that the discount could increase profits and dividends to the Federation.
If this is a commercial promotion, its business rationale should be clear. If it is a government-directed intervention, Nigerians deserve to know how it has been authorised, what it costs and how it fits within NNPC’s statutory obligations.
There is a more immediate problem with the government’s claim that no public money is involved. The same announcement identifies tax and duty waivers on petrol as part of its relief measures. Oyedele valued these concessions at more than ₦3.3 trillion for the year ending September 30, 2026.
Forgone tax revenue is a fiscal cost. It reduces the money available to government, even where no cash is transferred directly to consumers or petroleum marketers. Tax concessions are not necessarily classified identically to direct fuel subsidies, but their financial implications cannot be ignored when assessing the total cost of a fuel-price relief programme.
The government must therefore distinguish between two claims: that NNPC Retail’s particular discount requires no budgetary payment, and that the wider package of measures has no public cost. The first may be correct. The second cannot be sustained simply by pointing to the retail margin.
Nigeria is not the first country to reduce fuel-price components to cushion consumers. In March 2022, Ghana announced a three-month reduction of 15 pesewas per litre in margins within its petroleum price build-up. The measure covered the margins of the Bulk Oil Storage and Transportation Company, the Unified Petroleum Pricing Fund, fuel marking and primary distribution. The government expected the reductions to lower pump prices.
That precedent illustrates the importance of identifying precisely which margins are being reduced and who bears the resulting cost. A reduction in a regulated component of the petroleum price build-up is not necessarily the same as a retailer voluntarily accepting lower profits. The economic consequences depend on the arrangement itself, not the label attached to it.
The government’s proposed ₦1,350-per-litre ceiling on petrol’s ex-gantry or landing cost raises a separate concern. Under the announced arrangement, refiners and importers would initially absorb costs above the ceiling and recover the shortfall when crude prices or exchange rates become more favourable.
This is not necessarily a subsidy. If suppliers eventually recover their costs through future sales and bear the commercial risk themselves, the arrangement may amount to price smoothing. But the government must explain what happens if costs remain high, losses cannot be recovered or the arrangement is extended. If government eventually assumes those losses, the fiscal implications would change.
Nigeria’s recent experience with NNPC’s energy-security expenses also demonstrates why financial classifications matter. NNPC’s audited accounts recorded energy-security expenses of ₦4.8 trillion in 2023 and ₦7.13 trillion in 2024. Its 2025 accounts subsequently reported ₦11.2 trillion in receivables from the Federation for costs and advances incurred on the Federation’s behalf.
The 2025 figure was not a new ₦11.2 trillion fuel-subsidy payment; NNPC reported that outstanding energy-security receivables had been reconciled against taxes, royalties and dividends due to the Federation.
The lesson is not that energy-security spending is fuel subsidy. It is that the public must understand how government-related costs are incurred, recorded and settled. The same standard should apply to the current fuel-price interventions.
President Bola Tinubu declared on May 29, 2023, that fuel subsidy was gone. The government should not be prevented from responding to rising global energy prices or easing pressure on households. Nor should every intervention to moderate prices be condemned as a return to the former subsidy regime.
But Nigerians should not have to accept assurances in place of accounts. The government should publish the projected and actual cost of the NNPC Retail discount, explain the basis for the tax concessions, and disclose the terms governing the proposed price ceiling and the recovery of suppliers’ losses.
The central issue is not whether the old subsidy regime has formally returned. It is whether the government’s new interventions are transparent, sustainable and honestly accounted for.
A discount may be commercial. A tax waiver has a revenue cost. A price ceiling may transfer financial risk across time. These are different instruments, and each must be assessed on its own terms.
The government has a responsibility to demonstrate who pays, who benefits and who carries the risk. It cannot settle that question merely by insisting that subsidy is gone.
The name of a policy is not an account of its cost. Nigerians deserve both.
