Voodoo economy: The Tinubunomics of fuel pricing in Nigeria

By: Aisha Alimi

A fuel bill does not disappear because government gives it a new name. Someone must pay.

On 8 October, the Federal Government announced a 30-day petrol discount through NNPC. It insists this is not a subsidy. It is also negotiating a ₦1,350-per-litre limit on the price at which petrol leaves the refinery or enters the country. Refiners and importers would cover costs above that limit and recover the money later. The limit would be reviewed monthly.

Apparently, ₦1,350 is the magic number for stability and renewed hope. But before Nigerians applaud, there are questions to answer.

1. How much is the discount?

A discount should have a clear amount. How many naira will we save on each litre? Saying petrol will be cheaper for 30 days does not tell a family how much it will save, or what happens on day 31.

2. Why ₦1,350?

Show us the sums behind this number. It is not a promised pump price. Moving petrol to stations and selling it still costs money. So, what price should Nigerians expect at the pump?

3. What does selling at cost mean?

How much does NNPC pay to buy the petrol, move it, store it and run the station? Buying petrol from a refinery is different from making it. Without the figures, “at cost” tells us very little.

4. What does the country give up?

Selling at cost can mean removing the usual profit margin. But how much profit is NNPC giving up? Could that mean less income for its public owners? Calling it a discount does not make the public cost disappear.

5. Who funds the gap for fuel sellers?

Suppose, as an example, petrol costs ₦1,550 per litre at the refinery gate but the seller receives ₦1,350. That leaves a ₦200 gap. Sellers still need money to buy crude or petrol and keep operating. Who has agreed to carry that bill?

6. What if fuel stays expensive?

Across millions of litres, unpaid costs grow quickly. At what point does the arrangement stop? Unless Tinubunomics comes with a crystal ball, government cannot promise when crude prices will fall enough to clear the bill.

7. How much can sellers claim back?

Is there a limit on the money owed and a deadline for repayment? Can sellers add interest or other charges? Without these rules, a temporary arrangement could leave consumers paying old bills for a long time.

8. Who checks the claims?

Each seller should show its costs, losses and money recovered. Independent checks must stop inflated claims and payment for the same loss twice. Nigerians should not pay extra for waste or poor management.

9. Will prices fall when costs fall?

Or will sellers keep prices higher to recover old losses? Price smoothing delays both increases and decreases; it does not remove fuel costs. The naira can also weaken while dollar oil prices fall, leaving little room to repay earlier losses.

10. Who gets the cheaper petrol?

Government says transporters will have priority. How will stations identify them? What stops someone buying discounted petrol and reselling it? A benefit that cannot be traced may miss the people it is meant to help.

11. Will bus fares come down?

Cheaper petrol for drivers does not guarantee cheaper rides for passengers. Who checks that the saving reaches us? Keeping a high fuel price steady also does not make it affordable. The test is what ordinary people actually save.

12. What are the crude sale terms?

Oyedele used $80 per barrel as an example of a six-month forward sale. A fair deal for future delivery is not automatically a subsidy. But selling below comparable market terms gives up income. Publish the terms and show how consumers benefit.

A pricing framework that works should preserve commercial prices while providing clearly funded, limited support. Any oil revenue used must actually be available. Benefits must reach verified consumers, with published records and independent checks.

Before asking Nigerians to applaud, government should show the costs, payment rules and real savings. A bill pushed into tomorrow is still a bill Nigerians may have to pay. Three years into Tinubunomics, Nigerians deserve answers before another promise.

Ms Alimi sent this piece from Ibadan.