By Mohammed Adah Shaibu Tettes Ph.D
The press release by Bayo Onanuga on Oct. 8 is polished in language but hollow in economics, contrary to the Petroleum Industry Act and plainly political.
No benefit for most Nigerians
What the government announced is public relations, not relief. NNPC Retail controls less than 30% of retail outlets. Even if it sells at cost, more than 70% of Nigerians will still buy from independent marketers and private depots that are under no obligation to follow the directive. The motorist queuing at MRS or Total in Idah, Egume, Abuja or Lagos will see no benefit.
Saying “if landing cost is N1,300, NNPC will sell at N1,300” ignores retail operating costs — staff salaries, truck bridging, station operations, bank interest and evaporation losses. If NNPC forgoes profit margin it still must absorb operational costs; the shortfall will be transferred to the Federation Account. That is subsidy by another name. NNPC cannot run at a loss indefinitely without collapsing or returning to the Treasury for a bailout.
More fundamentally, the problem is not short-term volatility between N1,400 and N1,500. It is that fuel rose from N195 in May 2023 to more than N1,300 in 2026 while incomes did not increase proportionately. Compressed natural gas, which the government promotes as 60% to 70% cheaper, remains effectively unavailable — fewer than 1% of vehicles have been converted after three years of promises.
Contrary to international practice
When energy shocks occur, governments typically pursue one of three responses: direct, time‑bound cash transfers and capped household energy bills funded by windfall taxes (UK, Germany, France); transparent, rules‑based fuel stabilization funds with published triggers (Kenya, South Africa); or releases from strategic petroleum reserves to boost supply (United States).
Nigeria’s approach — asking refiners and importers to “carry the shortfall and recover later” above N1,350 — amounts to forced credit, not smoothing. No investor will absorb losses today on the promise of recovery tomorrow in an environment of exchange‑rate unpredictability. The likely outcome is scarcity, hoarding and a black market.
The proposed “excess profit tax” is equally problematic. In a deregulated market, defining “excess” profit is difficult; the government cannot deregulate when it suits higher prices and regulate when it wants to punish marketers.
Potential breach of the PIA
The scheme appears to conflict with the Petroleum Industry Act 2021. Section 205(1) provides that pricing of petroleum products is determined by market forces; government’s role is regulatory oversight, not price fixing. Sections 4 and 5 establish the National Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) as an independent regulator. The finance minister cannot unilaterally set an ex‑gantry ceiling of N1,350 and compel refiners to carry shortfalls; such measures fall within the regulator’s remit and require prescribed procedures, including public consultation.
Section 64 makes NNPC a commercial company under the Companies and Allied Matters Act, with duties to shareholders to be commercially viable. Directing it to forgo profit margins by executive fiat revives the pre‑PIA practice of treating NNPC as a treasury source, undermining its balance sheet and its ability to raise commercial finance for the National Strategic Fuel Reserve the government now proposes.
Timing suggests political motive
Timing matters. This crisis has persisted for two years. Announcing forward sales, CNG rollouts, cash transfers and a strategic reserve within 30 days — three months before a presidential election — reads as election‑cycle policy.
The move rebrands measures as “not subsidy,” uses NNPC Retail as a political prop, promises monthly reviews without immediate transparency and dangles cash transfers that may never reach the vulnerable. If the government were sincere, it would have operationalized the PIA’s stabilization‑fund provision since 2023, required naira‑denominated crude supply to domestic refineries, and invested savings from subsidy removal in mass transit.
Conclusion
You cannot deregulate misery and regulate relief. Either you operate a market, or you do not. This announcement attempts both: to win international approval for subsidy removal while offering back‑door relief to placate voters.
The average Nigerian does not need rhetoric about “smoothing prices over time.” He needs affordable fuel and reliable public transport. This is not policy; it is a campaign message.
