CPPE: Temporary fuel relief not return to subsidy regime

THE Centre for the Promotion of Private Enterprise (CPPE) has said the Federal Government’s latest fuel price relief initiative through the Nigerian National Petroleum Company Limited (NNPC) should not be interpreted as a reversal of petrol subsidy removal, describing it as a temporary response to rising global oil prices.

The organisation said the intervention was intended to cushion households and businesses against an extraordinary energy price shock triggered by geopolitical tensions that have pushed crude oil prices above $100 per barrel.

In a policy brief issued on Tuesday, CPPE Chief Executive Officer, Dr Muda Yusuf, argued that the current situation required pragmatic government intervention without abandoning the market-oriented framework for petroleum pricing.

He said the recent surge in fuel prices was driven primarily by developments in the international energy market and was affecting both oil-producing and oil-importing countries.

According to Yusuf, governments can introduce temporary relief measures during exceptional economic circumstances without reversing the underlying policies guiding their economies.

“Economic policies are instruments for promoting citizens’ welfare; they should not become rigid doctrines that prevent governments from responding to exceptional social and economic difficulties,” he said.

READ ALSO: Otti: Reintroducing petrol subsidy would not serve Nigeria’s interest

Intervention far smaller than former subsidy regime

CPPE said the scale of the current intervention differed significantly from the former petrol subsidy arrangement, under which the government bore a substantial portion of the cost of nationwide fuel consumption.

The organisation estimated that the previous regime covered petrol consumption of between 50 million and 90 million litres daily at various times, creating substantial fiscal pressures and limiting funds available for infrastructure and other development priorities.

By comparison, the current intervention covers about 70 million litres of NNPC fuel supply monthly, against estimated national petrol consumption of 50 million litres daily.

CPPE said the limited coverage, alongside the absence of a general government-mandated petrol price or a blanket subsidy obligation on private operators, distinguished the initiative from the former subsidy system.

It warned that restoring a broad-based fuel subsidy would expose public finances to renewed pressure, particularly as Nigeria contends with infrastructure deficits, debt-service obligations and competing development needs.

The organisation maintained that the removal of the former subsidy was a necessary structural reform, adding that temporary relief should not automatically be viewed as a retreat from the policy.

NNPC’s commercial role and investor confidence

The orgaanisation said NNPC’s status as a government-owned commercial enterprise did not prevent it from participating in limited interventions designed to protect the public interest during exceptional circumstances.

However, it stressed that such interventions must be transparent, proportionate, time-bound and financially sustainable to prevent them from undermining the company’s commercial mandate.

“Government ownership creates an opportunity to deploy public assets strategically in exceptional circumstances. It does not, however, justify an indefinite departure from commercial discipline,” CPPE said.

On investor confidence, the organisation argued that a targeted and temporary relief programme would not necessarily undermine ongoing petroleum market reforms, provided the government avoided imposing commercially unviable prices, discriminating against private operators or restricting market competition.

It said investors were more concerned about policy predictability, market access, commercial viability, fiscal sustainability and the protection of legitimate investments.

CPPE added that private operators remained the dominant participants in the downstream petroleum market, making it important for the government to preserve fair competition and a stable regulatory environment.

READ ALSO: CPPE: Restoring petrol subsidy could cost Nigeria nearly N20trn annually

CPPE seeks wider relief beyond fuel discounts

Despite welcoming the initiative, the organisation said its limited coverage meant the overall impact on household welfare would also be constrained.

It urged federal and state governments to introduce broader measures to reduce the impact of higher energy costs on transportation, food production and household spending.

The institute identified affordable mass transportation as a priority, recommending investments in high-capacity buses powered by compressed natural gas, electricity and other economically viable alternatives.

According to CPPE, subsidised public transport could provide wider relief than limited petrol discounts by reducing commuting costs for low-income workers, students and small-business operators.

It said cheaper transportation would also improve labour mobility, lower operating costs for small enterprises and support economic activity.

The organisation further called for targeted support for farmers to improve access to fertilisers, agrochemicals, agricultural machinery and other productivity-enhancing inputs.

It noted that rising energy costs affect several stages of food production and distribution, including land preparation, irrigation, mechanisation, transportation and storage.

CPPE said reducing production and distribution costs would offer a more sustainable response to rising food prices than relying mainly on general consumption subsidies.

States urged to introduce targeted support

The organisation also called on state and local governments to share responsibility for cushioning citizens against the energy price shock.

It said state governments could introduce discounted fuel outlets, subsidised public transportation and targeted assistance for vulnerable households, provided the programmes had clear eligibility criteria, transparent funding arrangements and defined timelines.

CPPE urged governments to maintain market-based petroleum pricing, fair competition and transparent regulation while pursuing policies that encourage investment in domestic refining.

In its conclusion, the organisation said Nigeria needed a framework for temporary, targeted and transparent social protection during exceptional economic shocks rather than a return to the former subsidy regime.

It maintained that the challenge was to balance the protection of vulnerable citizens with fiscal sustainability and the credibility of ongoing economic reforms.

“The current global energy crisis demands pragmatic policy responses, not ideological rigidity,” Yusuf said, adding that economic reforms must remain sustainable while responding to citizens’ welfare needs.