Despite the government’s explanation, the intervention has raised questions among industry operators about its implementation, the implications for competition and the ability of suppliers to recover their costs. Independent marketers are now faced with the challenge of competing with NNPC Retail during the 30-day discount period without eroding their margins or losing customers to cheaper outlets.
A petrol marketer, who pleaded to remain anonymous, said the price reduction had changed market dynamics and forced operators to reconsider their pricing strategies to retain customers.
“The price reduction has changed the dynamics of the market, and every marketer now has to review their pricing strategy to remain competitive. Customers will naturally gravitate towards outlets offering lower prices, so we are looking at ways to retain our customers through better service, efficient operations and competitive pricing. It is now a question of adapting quickly to the new market reality,” the marketer said.
For his part, former Chairman of the Major Energies Marketers Association of Nigeria (MEMAN), Tunji Oyebanji, warned that the N1,350-per-litre price benchmark could create confusion in a market where petrol prices are expected to reflect prevailing supply costs.
He questioned how suppliers would manage the difference between market prices and the proposed benchmark, particularly if they were required to absorb higher costs temporarily and recover them when market conditions improved.
“By the price benchmark, you have created all sorts of confusion. What will happen now is that everybody will gravitate around that point,” Oyebanji said.
He argued that the arrangement could place additional financial pressure on importers and refiners, especially where the cost of financing inventories remained high.
According to him, suppliers could be forced to borrow at elevated interest rates to sustain the arrangement, while uncertainty over when and how they would recover additional costs could undermine their operations.
Oyebanji also recalled the experience of the former petrol subsidy regime, when delayed reimbursements reportedly exposed marketers to financing costs and foreign-exchange losses.
He warned that widening price differences between Nigeria and neighbouring countries could create fresh incentives for the smuggling of petroleum products across the borders.
A senior official of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), who spoke on condition of anonymity, said marketers were not consulted before the intervention was announced. The official declined to assess the merits of the policy, stating that the industry had not been adequately involved in its formulation.
Officials of the Major Oil Marketers Association of Nigeria (MOMAN) and Dangote Petroleum Refinery, who were contacted, declined to comment on the matter.
Agbakoba, Analysts, APC, ADC Differ
The debate over the petrol price discount has extended beyond the government and industry operators, with policy analysts, business groups and political parties offering differing views on whether the intervention can provide meaningful relief without creating fresh fiscal or market-related problems.
Notwithstanding Oyedele’s explanation, the Centre for Social Justice (CSJ) said the government’s proposed price modulation mechanism, intended to keep petrol prices at no more than N1,350 per litre, fell short of the relief Nigerians expected.
The organisation’s Lead Director, Eze Onyekpere, said Nigerians had been paying about N800 per litre before the outbreak of the America-Israel-Iran war and expected a more comprehensive plan to reduce prices towards N400 to N500 per litre over the medium term.
He proposed a domestic crude oil pricing differential that would allow local refineries to obtain crude at prices below international benchmarks, alongside measures to prevent the diversion and smuggling of refined products.
Onyekpere also called for the concession of the four NNPC refineries to technically and financially capable investors, as well as the recovery of funds allegedly lost through turnaround maintenance projects.
He argued that part of the savings arising from subsidy removal could be deployed to reduce the cost of petrol and ease the hardship facing households and businesses.
Professor Emeritus of Petroleum Economics, Wumi Iledare, said the discount could only be justified if it remained temporary, targeted and transparent.
“The decisive question is simple: who pays for the discount? If NNPC Ltd sells below economic cost and government later reimburses it — or an implicit public liability arises — the measure is subsidy-equivalent, whatever its name,” he said.
Iledare urged the government to disclose the discount per litre, eligible volumes, financing source, maximum fiscal exposure and exit plan.
He added that any intervention should be transparent, subject to fiscal limits, independently auditable and designed to preserve competitive neutrality in the downstream petroleum market.
Energy analyst Dan Kunle also criticised the policy as an ad hoc response to rising prices, arguing that it could distort the market without addressing the underlying factors driving petrol costs.
He proposed a more coordinated arrangement involving the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), NNPC Retail, Dangote Refinery and qualified downstream operators, including MRS and AP, to improve domestic crude allocation and petrol pricing.
Kunle suggested allocating 250,000 barrels of crude oil per day to Dangote Refinery for domestic processing, with NNPC Retail purchasing the resulting petrol at N1,320 per litre and selling it at N1,350.
“Your local problem has local solution,” he said, urging the relevant parties to negotiate a workable framework and submit it to President Tinubu for approval.
The Director of the Abuja School of Social and Political Thought, Sam Amadi, described the N60-per-litre reduction as a face-saving measure that was politically motivated and economically insufficient to address the pressure on households.
Speaking on Arise News Channel, Amadi argued that the reduction would have little immediate effect on transport fares or the broader cost of living.
“First, I think it’s a face-saving strategy. Again, the government has been too late, too little,” he said.
He added that the intervention might have some political value but would not substantially ease the economic difficulties confronting Nigerians.
The debate has also assumed a political dimension, with the ruling All Progressives Congress (APC) insisting that the petroleum subsidy regime would not return.
The APC National Secretary, Senator Surajudeen Ajibola Basiru, said the distinction between a retail discount and a fuel subsidy was clear, maintaining that the government would not return to the previous arrangement.
“The issue of fuel subsidy, just as the Minister of Petroleum said Thursday is that we are not going back to subsidy. It is gone, and gone forever,” Basiru said.
He argued that the removal of the subsidy had freed the government from the financial pressures associated with borrowing to fund salaries, pensions and development projects.
The APC National Chairman, Nentawe Yilwatda Goshwe, also criticised opposition proposals to reduce petrol prices through crude oil pricing arrangements, arguing that local refineries could not depend entirely on government-supplied crude because part of Nigeria’s crude production belonged to joint-venture partners.
The ADC, however, described the proposed intervention as a loan to Nigerians, arguing that costs absorbed by suppliers today could eventually be passed on to consumers.
In a statement issued by its National Publicity Secretary, Bolaji Abdullahi, the opposition party said the discount did not provide a lasting solution to the cost-of-living crisis.
“The principle is straightforward: what suppliers forgo today, Nigerians will pay later. The government wants to announce a discount, collect the applause and leave the Nigerian people to settle the bill,” the party said.
The ADC argued that a temporary reduction in petrol prices would not resolve the broader pressures on food prices, transport fares and household expenditure.
Separately, a Senior Political Assistant to the ADC presidential candidate, Atiku Abubakar, Demola Olarewaju, accused President Tinubu of adopting an idea previously advanced by Atiku on petrol pricing.
In a post on X, Olarewaju criticised the administration’s approach to the intervention and called for a full return to fuel subsidy, further intensifying the political debate surrounding petrol prices.
Amid the controversy, former President of the Nigerian Bar Association, Olisa Agbakoba, advocated a domestic crude oil price differential that he said could bring petrol prices down to N400 per litre.
Speaking at the annual conference of the Association of Energy Correspondents of Nigeria in Lagos, Agbakoba argued that Nigeria could consider a pricing arrangement that gives domestic refiners access to crude oil at a lower price than the international benchmark.
He said the approach could reduce the cost of locally refined petrol and provide more meaningful relief to consumers.
The immediate challenge for independent marketers, however, is how to compete with NNPC Retail during the 30-day discount period without eroding their margins or losing customers to cheaper outlets.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said the initiative would bring relief to some people.
Yusuf told THISDAY that the key distinction was that the intervention was limited in scope and possibly more targeted at vulnerable segments of society who would not mind long queues.
He said the fiscal burden of the discount would be much less than that of a blanket subsidy, under which about 50 million litres would have to be covered.
“A blanket subsidy is surely not sustainable. This intervention is also time bound. It also has a significant symbolic value,” Yusuf said.
He emphasised that “addressing the cost-of-living challenge is a shared responsibility among all tiers of government — federal, state and local governments” and suggested that “more investment in mass transit vehicles with subsidised transport fares is needed to complement this latest intervention.”
Similarly, the Chief Executive Officer of BIC Consultancy Service, Boniface Chizea, said it was not surprising that calls for a return to subsidy were gaining ground, considering the level of hardship in the country.
Chizea said: “After all, we must not stop reminding ourselves that the core essence of leadership is the welfare and well-being of a generality of the population.
“The pump price today at above N1,400 per litre is at the same time punitive, excruciating, even wicked, and most certainly not sustainable.
“Therefore, the various steps being taken are to temporarily ameliorate the hardship that has been visited on the population.
“It is often recommended as a matter of fact that it is better to subsidise production rather than consumption for more reasons than one.”
He said there were several reasons Nigeria should avoid returning to pump-price subsidies, describing such payments as a wasteful misallocation of scarce resources.
“If you also make pump price in Nigeria much lower than those in neighbouring countries, we weaponise irresistible and difficult to control products smuggling as economic agents take undue advantage.
“What we must bear in mind is that it is urgent for us as a country to think properly through how to cater for the welfare and well-being of the majority of our population living on the margin by making our budgeting pro-poor,” Chizea said.
The competing positions have left the 30-day petrol discount at the centre of an increasingly broad debate over fuel pricing, market competition and the government’s response to rising living costs. While the government maintains that NNPC Retail is temporarily sacrificing its margin rather than reinstating a subsidy, critics are questioning the sustainability of the relief and the implications for the wider downstream market. Atiku’s central question remains whether the intervention will be followed by a lasting policy framework or whether consumers and businesses will face renewed pressure when the discount expires.
Chuks Okocha, Ndubuisi Francis, Linus Aleke, Chinedu Eze, Peter Uzoho and Dike Onwuamaeze
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