CPPE says petrol discount will have minor impact on household welfare

The Centre for the Promotion of Private Enterprise (CPPE) says the federal government’s petrol price relief will have limited impact on household welfare.

In a policy brief on Tuesday, Muda Yusuf, chief executive officer of CPPE, said the limited coverage of the relief initiative through the Nigerian National Petroleum Company (NNPC) Limited was too small to address the wider effects of the global energy price shock.

“While the proposed fuel price relief is welcome, its limited coverage means that its aggregate impact on household welfare will also be limited,” Yusuf said.

He urged federal and state governments to prioritise affordable transportation and support for food production, rather than rely predominantly on petrol price discounts.

Yusuf said transportation was one of the most immediate channels through which higher energy prices affected household expenditure and business operating costs.

“Targeted investment in heavily subsidized public transportation would deliver broader economic and social benefits than limited petrol price discounts,” he said.

Yusuf recommended high-capacity buses powered by compressed natural gas (CNG), electricity, and other economically viable alternatives.

He said the measures would reduce commuting costs for low-income workers, students, and small business operators, while improving labour mobility and lowering operating costs for small enterprises.

Yusuf called for targeted support to improve access to fertilisers, agrochemicals, agricultural machinery and other productivity-enhancing inputs.

“Rising energy costs increase the costs of land preparation, irrigation, mechanization, transportation, storage and food distribution,” he said.

Yusuf urged state governments to consider discounted fuel outlets, subsidised public transport and targeted assistance for vulnerable households.

He said such programmes should have clear eligibility rule, defined time frames, transparent funding and safeguards against diversion.

‘CPPE DEFENDS TEMPORARY FUEL RELIEF’

Yusuf said the relief initiative should not be interpreted as a reversal of the policy to remove petrol subsidy.

He said the current intervention differed in scale and design from the former arrangement.

Yusuf said in the brief that the intervention covers approximately 70 million litres of NNPC fuel supply monthly, compared with estimated national petrol consumption of 50 million litres daily.

He said that under the former subsidy regime, the government effectively carried a substantial fiscal burden on nationwide petrol consumption estimated at between 50 million and 90 million litres daily.

Yusuf warned against restoring broad-based consumption subsidies, saying they would recreate serious fiscal vulnerabilities.

“Such an obligation would be fiscally unsustainable, especially in an economy facing substantial infrastructure deficits, debt-service commitments and competing development priorities,” he said.

Yusuf said the current intervention should remain temporary and financially sustainable, while the government preserves market-based petroleum pricing and fair competition.

On October 8, the federal government announced plans to cap petrol landing costs at N1,350 per litre to limit fluctuations in pump prices caused by changes in global crude oil prices and exchange rates.

Taiwo Oyedele, minister of finance, said the government was offering a 30-day petrol discount at NNPC filling stations, with priority for public transport operators, as part of measures to ease the pressure of petrol cost on households.(TheCable)