The Federal Government says the petrol discount introduced at Nigerian National Petroleum Company Limited, NNPC, retail stations does not amount to a return of fuel subsidy. Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, says the price reduction is being funded from NNPC Retail’s profit margin rather than public funds. Oyedele explained that […]
The Federal Government says the petrol discount introduced at Nigerian National Petroleum Company Limited, NNPC, retail stations does not amount to a return of fuel subsidy.
Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, says the price reduction is being funded from NNPC Retail’s profit margin rather than public funds.
Oyedele explained that NNPC Retail purchases petrol from the Dangote Refinery and other suppliers at market prices before adding a retail margin to determine the final pump price.
Under the discount arrangement, the company reduces or gives up part of that margin and passes the savings to consumers.
The Minister says this differs from a subsidy, where the government uses public funds to pay part of the price that would ordinarily be paid by consumers.
He also says the discount could commercially benefit NNPC Retail by attracting more customers and increasing sales volumes, potentially offsetting the lower earnings on individual litres.
Oyedele dismissed concerns that the discount could encourage petrol smuggling, saying retail margins account for less than five per cent of the pump price, while petrol remains more expensive in neighbouring countries.
The Federal Government says other measures being implemented to reduce pressure from fuel costs include expanding Compressed Natural Gas transportation, waiving taxes and duties on petrol and removing illegal levies that increase transportation costs.
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