Presidency To Atiku: You Are Ignorant Of The Consequences of A Return To Fuel Subsidy Era

By Ayodele Oni

The Presidency has informed that former Vice President and Presidential candidate of the African Deomcratic Congress, (ADC), Atiku Abubakar, that he will require a clear legal, fiscal and administrative framework before he can reverse the withdrawal of petrol subsidy.

Reacting to Atiku’s statement to restore fuel subsidy, the Presidency, in a statement signed by Bayo Onanuga, Presidential Spokesman stated that

“any proposal to restore petrol subsidy must be subjected to rigorous scrutiny, especially, regarding its cost, funding, legality and implications for the country’s emerging domestic refining industry.

The statement reads: “Alhaji Atiku Abubakar, former Vice President and presidential aspirant, has unveiled his economic prescription for Nigeria ahead of the 2027 general election, proposing, among other measures, a return to the fuel subsidy regime abolished under the country’s ongoing petroleum-sector reforms.

“The proposal has raised questions over its fiscal implications, particularly given the significant changes in Nigeria’s petroleum industry since 2023.

“Atiku is constitutionally entitled to canvass alternative policies and seek the support of Nigerians. He is also free to revise positions he previously held.

“But any proposal to restore petrol subsidy must be subjected to rigorous scrutiny, especially regarding its cost, funding, legality and implications for the country’s emerging domestic refining industry.

“The first issue requiring clarification is the meaning of ‘fuel subsidy’. Subsidy is not money simply waiting in government coffers to be distributed to Nigerians in order to make petrol cheaper.

 “Under the old arrangement, the government absorbed the difference between the regulated pump price and the actual cost of supplying petrol. That system imposed a substantial burden on public finances and contributed to accumulated liabilities within the petroleum sector.

“The Petroleum Industry Act established a new framework for the downstream petroleum market and provided for the eventual removal of petrol subsidy. President Bola Ahmed Tinubu accelerated the process in 2023, bringing an end to a system that had already become financially unsustainable.

“Consequently, restoring the old arrangement cannot be achieved merely through a presidential announcement.

“It would require a clear legal, fiscal and administrative framework, including identification of the funds required and the mechanism through which the subsidy would be administered.

“More importantly, Nigeria’s petroleum landscape has changed considerably since 2023.

For decades, the country depended heavily on imported petrol, while government bore the financial consequences of selling the product below its economic cost.

“Today, the emergence of substantial domestic refining capacity has begun to change that equation.

“The Dangote Refinery, alongside other emerging local refineries, has strengthened Nigeria’s capacity to refine petroleum products locally.

“The development presents an opportunity to conserve foreign exchange, deepen domestic industrial capacity and strengthen energy security.

“A return to a heavily subsidised market could undermine these gains and create fresh distortions in the downstream sector, with consequences for smaller domestic refineries, investment and employment.

“It is, therefore, important that the subsidy debate reflects the realities of Nigeria’s petroleum industry today rather than the conditions that prevailed several years ago.

“The financial burden of the former subsidy regime was enormous. Government financing arrangements, accumulated liabilities and obligations to suppliers placed considerable pressure on the Nigerian National Petroleum Company and the wider public finances.

“The question Nigerians should therefore ask is simple: If fuel subsidy is restored, who pays for it? If petrol is sold below its economic cost, the difference must be absorbed somewhere.

“The consequences could include reduced allocations to states and local governments, lower spending on infrastructure and social services, increased borrowing, higher public debt or a combination of these.

“There is no doubt that the rising cost of petrol has imposed serious pressure on Nigerian households and businesses. The hardship associated with higher transportation and energy costs is real, and government must continue to pursue measures that reduce the burden on citizens.

“One such approach is the promotion of Compressed Natural Gas, which offers a potentially cheaper alternative to petrol for vehicles, taxis, buses and distribution fleets. Several major companies have already begun incorporating CNG-powered vehicles into their operations.

“The objective should therefore be sustainable relief for Nigerians, not a return to a fiscal arrangement that could once again weaken public finances.

“Nigeria must take advantage of its growing refining capacity, improved petroleum-sector regulation and increased competition to achieve greater stability in energy supply and, ultimately, more affordable prices.

Political promises, however attractive, must be supported by credible fiscal arithmetic.

“If Atiku Abubakar intends to restore fuel subsidy, Nigerians deserve clear answers. How much will the programme cost annually? What revenue source will finance it? Will the government borrow to fund it? Will existing petroleum-sector legislation have to be amended?

“How will subsidy payments be monitored and protected against the abuses that characterised the old regime?

“And now that Nigeria has substantially increased domestic petrol production, what exactly would the proposed subsidy subsidise-the cost of local production, transportation, distribution or another component of the petroleum value chain?

“These questions cannot be wished away.

Nigeria cannot afford to return to policies whose immediate benefits are visible while their eventual costs emerge as debt, reduced public investment, pressure on the naira and diminished resources for development.

“The country deserves a robust debate on the cost of living and the direction of economic policy. But that debate must be anchored in the realities of Nigeria’s economy and petroleum sector today, rather than the conditions of yesterday.

“Atiku Abubakar has every right to propose a different economic direction. Nigerians, in turn, have the right to demand full disclosure of the fiscal, legal and economic implications of any plan to restore fuel subsidy.

“The choice before the country should not merely be between cheap petrol today and expensive petrol tomorrow.”