Petrol discount not subsidy — Presidency

The Nigerian government announced on Thursday that NNPC Retail will forgo its profit margin on petrol and sell it to consumers at cost, to provide relief from global crude oil price fluctuations. This move was announced by President Bola Tinubu and does not indicate the reintroduction of the petrol subsidy, which ended on May 29, 2023.

The petrol price reduction is part of a series of measures announced by Finance Minister Taiwo Oyedele. The Special Adviser to the President on Information and Strategy, Bayo Onanuga, stated that NNPC Retail, which already sells petrol at the lowest price in the market, will implement the new policy within 30 days. The government hopes that other marketers will follow NNPC Retail's lead, as the sudden increase in crude and petrol prices is not anticipated to be a long-term issue.

The government is also negotiating a ceiling of N1,350 per litre for the ex-gantry or landing cost of petrol, aiming to maintain stable pump prices. If costs exceed this limit, refiners and importers will bear the difference until market conditions allow, without breaching the ceiling. The government will sell crude forward to domestic refineries to protect pump prices from global volatility as production increases and previously committed crude becomes available.

The measures announced include scaling up compressed natural gas deployment, increasing funding for cash transfers to vulnerable households, subsidised credit for small businesses and consumers, and considering excess profit tax for operators who exploit consumers. The government aims to cut regulatory costs that contribute to the cost of doing business and indirectly affect the prices of goods and services.

This announcement is not a subsidy or price control, but rather a strategy to secure supply and deter artificial scarcity and market manipulation.