Atiku’s Fuel Subsidy Plan Unrealistic, Destructive, Says Presidency

Atiku’s Fuel Subsidy Plan Unrealistic, Destructive, Says Presidency

The Presidency has criticised former Vice-President Atiku Abubakar’s proposal to restore petrol subsidy if elected president, describing the policy as fiscally unsustainable, retrogressive and incompatible with the changes that have taken place in Nigeria’s petroleum sector.

The Special Adviser to President Bola Tinubu on Information and Strategy, Bayo Onanuga, made the position known in a statement on Thursday titled, “Restoring Petrol Subsidies: Atiku’s Volte-Face and Desperation for Power.”

Onanuga said Atiku’s position represented a departure from his previous stance against petrol subsidy, arguing that the former vice-president had now embraced the policy for political reasons ahead of the 2027 presidential election.

According to him, Atiku had previously advocated the removal of fuel subsidy but had now “opportunistically recanted” the position in an attempt to appeal to Nigerians facing economic hardship.

The presidential aide, however, said Atiku had the constitutional right to propose alternative policies, but insisted that Nigerians were entitled to know how a renewed subsidy regime would be funded and implemented.

He explained that petrol subsidy was not money sitting in government coffers for distribution to motorists, but rather the difference between the regulated pump price and the actual cost of supplying the product.

Onanuga said restoring the old system would require a new legal, fiscal and administrative framework, particularly because the Petroleum Industry Act had provided for the removal of petrol subsidy by the end of June 2023.

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He argued that President Tinubu merely accelerated the implementation of a reform already contemplated under the PIA by announcing the subsidy removal in May 2023.

The presidential aide also said Nigeria’s petroleum industry had changed significantly since the removal of subsidy, particularly with the emergence of large-scale domestic refining capacity.

He cited the Dangote Refinery as a major development that had altered the dynamics of the downstream petroleum sector, arguing that the country was gradually moving away from dependence on imported refined products.

Onanuga warned that returning to a subsidised petrol regime could undermine investments in local refining and reverse the gains recorded in domestic production.

He further argued that subsidy restoration would raise questions about who would bear the financial burden of selling petrol below its economic cost.

“If petrol is sold below its economic cost, someone must absorb the difference,” he said, noting that the burden would ultimately fall on public finances through reduced allocations, increased borrowing, higher public debt or reduced spending on infrastructure and social services.

The Presidency also rejected claims that the removal of subsidy had created a N30tn windfall for the Federal Government, describing such a figure as inaccurate.

Onanuga said the government had instead benefited from reduced fiscal pressure following the discontinuation of petrol price discounts and reforms in the foreign exchange market.

He added that the three tiers of government shared about N3tn from the Federation Account in July, describing the development as evidence of improved government revenues.

According to him, the country’s transition towards domestic refining and locally processed petroleum products could conserve foreign exchange, strengthen energy security, create jobs and support industrial development.

The presidential aide acknowledged that the removal of subsidy had increased the cost of living and placed considerable pressure on households and businesses.

He said the Tinubu administration was pursuing alternative measures to reduce the impact of high energy costs, including the promotion of Compressed Natural Gas, which he described as significantly cheaper than petrol for transportation.

Onanuga urged political actors to provide Nigerians with detailed fiscal calculations whenever they proposed policies such as subsidy restoration.

He asked Atiku to explain the annual cost of the proposed subsidy, the revenue source that would finance it, whether the government would borrow to fund it and whether amendments to existing petroleum-sector laws would be required.

He also questioned how any new subsidy regime would be monitored to prevent the abuses and corruption associated with the previous system.

The Presidency maintained that Nigeria needed sustainable solutions to the rising cost of living rather than a return to what it described as an opaque and financially burdensome petroleum pricing system.

It called for a broader debate on economic policy, but insisted that such discussions must take into account the realities of Nigeria’s current petroleum market and the country’s growing domestic refining capacity.

“Political promises must be backed by fiscal arithmetic,” Onanuga said, urging all political actors, including Atiku, to present Nigerians with the full fiscal and legal implications of any proposal to restore petrol subsidy.

Atiku’s Fuel Subsidy Plan Unrealistic, Destructive, Says Presidency