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Former Vice President and presidential candidate of the African Democratic Congress (ADC), Atiku Abubakar, has proposed a new fuel subsidy model that he says will shift government support from petroleum imports to domestic refining, while the Presidency has rejected the proposal as a return to an unsustainable subsidy regime.
Atiku unveiled the proposal as part of his Atiku Economic Recovery Plan (AERP) 2027, saying his administration would introduce a targeted, capped, transparently budgeted and independently audited production subsidy aimed at reducing energy costs and accelerating domestic refining.
The Presidency, however, described the proposal as a return to the “much-abused, wasteful” fuel subsidy system, arguing that Nigeria’s petroleum sector has changed significantly since the removal of the petrol subsidy in 2023.
In a statement by the Presidential Adviser on Information and Strategy, Bayo Onanuga, the Presidency said Atiku was entitled to propose alternative policies but should explain how the proposed subsidy would be funded and implemented under the current petroleum-sector framework.
Atiku’s proposal
Atiku said his proposal was not a return to the former import-subsidy system but a production-based intervention designed to support Nigerian refineries and ensure that consumers benefit directly.
“My proposal is not to resurrect the old subsidy regime. We will move subsidy from importation to production, from middlemen to Nigerian refineries, and from unverifiable claims to verifiable barrels,” he said.
Under the proposed model, qualifying public and private refineries would receive domestic crude at a preferential price, subject to production, efficiency, transparency and domestic-supply conditions.
Atiku said the cost of the intervention would be openly disclosed and subject to a predetermined fiscal ceiling approved through the national budget.
“The cost will be known. The ceiling will be known. The beneficiaries will be known. And, most importantly, the benefit delivered to Nigerians will be measurable,” he said.
He said no refinery would receive subsidised crude without independently verified evidence that the corresponding petroleum products had been supplied to the Nigerian market at prices reflecting the benefit of the intervention.
According to him, crude allocations, refinery intake, production yields, inventories and domestic deliveries would be reconciled to ensure that every subsidised barrel could be traced from allocation through refining to the consumer.
No permanent subsidy, Atiku says
Atiku said the proposed intervention would have sunset and periodic review provisions, with support per barrel progressively reduced as domestic refining capacity increased, refinery utilisation improved and production costs declined.
“Our objective is not permanent subsidy. It is to use temporary and disciplined support to build a refining industry strong enough eventually not to need subsidy,” he said.
He said the ultimate objective was to reduce transportation, food, energy and logistics costs, while creating jobs and improving Nigerians’ purchasing power.
Atiku also proposed sanctions against refinery operators that diverted subsidised crude or products, manipulated production records or failed to meet domestic-supply obligations.
He said previous subsidy transactions should also be subjected to lawful scrutiny, with anyone found through due process to have fraudulently obtained or diverted public funds prosecuted and made to refund the money.
Atiku questions subsidy removal
Atiku criticised President Bola Tinubu’s handling of the removal of the petrol subsidy, arguing that Nigerians had experienced significant increases in petrol, transportation and food prices since the policy was announced in May 2023.
He also questioned petroleum-related expenses recorded in the financial statements of the Nigerian National Petroleum Company Limited (NNPCL).
Atiku cited figures of approximately N4.84 trillion in Energy Security Expenses in 2023 and N7.13 trillion in 2024, arguing that Nigerians deserved greater clarity on the economic substance of the expenses and whether they included costs associated with petroleum-price differentials or under-recoveries.
“If government continued absorbing differences between the economic cost of petroleum products and what was recovered from the market, then Nigerians are entitled to ask how that differs economically from the subsidy they were told had disappeared,” he said.
Atiku also called for a month-by-month public reconciliation of what he described as approximately N30 trillion in Federation revenues, deductions, savings, transfers and related funds.
He stressed, however, that he was not alleging that the entire amount represented fuel subsidy or had been stolen.
Presidency rejects proposal
Responding to the proposal, the Presidency said Atiku’s plan amounted to a return to the old subsidy system, which it described as fiscally burdensome and prone to abuse.
Onanuga said the subsidy regime had already been dismantled under the Petroleum Industry Act (PIA) and that President Tinubu only accelerated its removal by a few weeks in May 2023.
According to him, restoring the former arrangement would require a clear legal, fiscal and administrative framework, including identifying the source of funding and determining how the policy would operate under the current petroleum-market structure.
The Presidency also argued that Nigeria’s petroleum industry had changed substantially since 2023, particularly with the emergence of large-scale domestic refining.
It cited the Dangote Refinery as an example of the country’s increasing domestic refining capacity and argued that the current market-driven system was creating opportunities for energy security, foreign-exchange conservation and industrial development.
The Presidency said returning to a subsidy regime could undermine smaller domestic refineries and recreate the fiscal pressures associated with the former system.
‘Who will pay for the subsidy?’
The Presidency challenged Atiku to provide detailed answers on the cost and funding of his proposed intervention.
“If the subsidy is restored, who pays for it? What will the new pump price be?” it asked, arguing that if petrol was sold below its economic cost, the difference would ultimately have to be absorbed by public finances.
It said such costs could translate into reduced government spending on infrastructure and social services, lower allocations to states and local governments, increased borrowing or higher public debt.
The Presidency also pointed to the government’s promotion of Compressed Natural Gas (CNG) as an alternative means of reducing transportation and energy costs, describing CNG as significantly cheaper than petrol.
It maintained that sustainable relief for Nigerians should not involve recreating a fiscal arrangement that could place renewed pressure on public finances.
Two competing approaches
Atiku said his proposed model would be based on the principles of targeting, fiscal limits, transparency, tracking and independent auditing, with the ultimate objective of phasing out the subsidy as domestic refining becomes more competitive.
The Presidency, on the other hand, argued that Nigeria should consolidate the reforms already undertaken in the petroleum sector rather than return to a subsidy regime it considers costly and susceptible to abuse.
The disagreement has therefore placed two competing approaches to petroleum pricing and energy affordability at the centre of the emerging 2027 presidential debate: Atiku’s proposed targeted production support for domestic refineries and the Tinubu administration’s continued opposition to petrol subsidies.
Nigeria’s petrol subsidy became a major fiscal and political issue before President Tinubu announced its removal in May 2023.
The policy had involved government intervention to keep petrol prices below the cost of supply.
Its removal led to a sharp increase in pump prices and triggered wider increases in transportation and living costs, while the Federal Government has maintained that ending the subsidy was necessary to reduce fiscal pressure and reform the petroleum sector.
