The Tinubu administration has extended a petrol discount at NNPC stations and proposed measures to stabilise prices. Atiku Abubakar advocates support for domestic refineries.
President Bola Tinubu’s administration has extended a discount at Nigerian National Petroleum Company Limited (NNPC Ltd) retail stations and proposed forward crude sales to domestic refineries and a negotiated ceiling on petrol supply costs.
The government maintains that its measures do not restore the former petrol-subsidy regime. Atiku says they contradict the government’s objections to his proposal.
The distinction lies in where support enters the supply chain, how it is financed and whether consumers receive the intended savings.
On 8 October, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, announced measures intended to cushion households and businesses against rising fuel prices.
According to a presidency statement, NNPC Retail agreed to forgo its petrol profit margin and sell at cost for an initial 30 days.
The announcement followed a ₦66-per-litre discount introduced by NNPC Retail on 1 October to mark Nigeria’s 66th Independence anniversary.
In an official statement on 9 October, NNPC Ltd confirmed that the promotion would continue until 31 October across its retail stations nationwide.
Mr Oyedele clarified the same day that the discount was financed through a reduction in NNPC Retail’s profit margin, rather than payments from the federal budget or Federation Account.
He explained that NNPC Retail purchases petrol from Dangote Refinery and other suppliers at market prices before adding its retail margin, which he said accounts for less than five per cent of the pump price.
He argued that higher sales could offset lower earnings per litre and help preserve the company’s profits and dividends to the Federation.
Mr Oyedele had also indicated that the proposed margin discount could be higher or lower than ₦66, depending on NNPC Retail’s calculations, as reported by PUNCH.
Therefore, it is not clear whether the 8 October arrangement will provide additional savings beyond the Independence anniversary promotion.
A 10 October PUNCH report found that motorists had to use the NNPC Fuel App and pay digitally to obtain the ₦66 reduction.
At outlets visited in Abuja, customers paying directly at the pumps were charged ₦1,405 per litre, compared with ₦1,339 for those using the app.
The app requirement formed part of NNPC’s original promotion. However, it could limit access for motorists without smartphones or suitable digital-payment arrangements, including some commercial transport operators whom the government says it intends to prioritise.
The Abuja observations do not establish pump prices or purchasing arrangements at every NNPC station nationwide.
NNPC has not published the number of customers who have received the discount or the volume of petrol sold at reduced prices.
The presidency illustrated the margin waiver using a hypothetical landing cost of ₦1,300 per litre, saying NNPC Retail would sell at that price rather than add its usual margin.
The figure was an example, not an announced nationwide pump price.
The government is also negotiating a ₦1,350-per-litre ceiling on petrol’s ex-gantry or landing cost.
Ex-gantry price is the price at which petrol leaves a refinery or supply facility. Landing cost generally refers to the cost of importing petrol. Neither is necessarily the final price paid by motorists, which may include transportation, distribution and retail margins.
Under the proposed arrangement, refiners and importers would initially absorb costs above the ceiling and recover the difference later, when crude prices or exchange rates become more favourable.
Mr Oyedele described this as price smoothing, with the ceiling subject to monthly review.
The government has not published the proposed agreements or recovery formula. Without those details, it is difficult to establish whether future prices would accommodate earlier shortfalls or what would happen if market conditions remained unfavourable.
The administration also plans to increase forward crude sales to domestic refineries as production rises and previously committed supplies become available.
Forward sales could improve supply certainty but would not necessarily reduce crude prices. Their financial implications depend on the agreed prices, volumes and payment terms, which have not been disclosed.
Atiku proposes support for qualifying petroleum products refined in Nigeria rather than imported finished products.
In written responses to PREMIUM TIMES, Phrank Shaibu, director of Strategic Communication of the ADC Presidential Campaign Council, said domestic refineries, including modular refineries, could qualify.
One proposed mechanism involves supplying crude at prices below the prevailing market rate, with the difference treated as production support.
