By By Elizabeth Ugbo
Former Vice President Atiku Abubakar has proposed restoring petrol subsidies if elected president in the next election, arguing that the policy could ease the rising cost of living for Nigerians. The proposal comes months before the election and has renewed debate over fuel prices, subsidy spending, domestic refining and Nigeria’s economic direction. However, critics say the plan could reverse petroleum-sector reforms and place fresh pressure on public finances.
Atiku’s Position Sparks Subsidy Debate
Atiku’s latest position marks a major shift from his earlier stance on petrol subsidies.
During the 2023 presidential campaign, he supported removing the subsidy regime. Now, he wants the government to consider bringing it back.
Supporters may view the proposal as a way to reduce pressure on households. However, critics question its long-term financial sustainability.
They also argue that Nigeria’s petroleum industry has changed significantly since 2023.
What Petrol Subsidy Really Means
Petrol subsidy does not represent money simply sitting in government accounts for distribution.
Instead, it covers part of the difference between the market cost of petrol and the regulated pump price.
Under the former system, the government absorbed significant costs to keep petrol prices below market levels.
That arrangement placed considerable pressure on public finances. It also created concerns about transparency, borrowing and subsidy verification.
Therefore, any proposal to restore the policy requires clear answers about its funding.
Petroleum Industry Act Changed the System
The Petroleum Industry Act (PIA) introduced a new framework for Nigeria’s downstream petroleum sector.
The legislation provided for the removal of petrol subsidies by the end of June 2023.
President Bola Tinubu accelerated the process after taking office in May 2023.
Consequently, petrol pricing moved toward a more market-oriented system.
Any return to the previous arrangement would therefore require careful consideration of existing laws and regulations.
Nigeria’s Refining Sector Has Also Changed
Nigeria’s petroleum market now operates in a different environment.
For years, the country depended heavily on imported refined petroleum products.
That dependence placed additional pressure on foreign exchange reserves.
However, domestic refining capacity has expanded in recent years.
The Dangote Refinery now plays a major role in Nigeria’s refined petroleum supply.
Other local refineries also have opportunities to expand production and compete in the market.
As a result, Nigeria has a chance to reduce its dependence on imported petrol.
It can also retain more value from its crude oil resources through domestic refining.
Could Subsidy Return Hurt Local Refineries?
Critics of Atiku’s proposal argue that a return to petrol subsidies could distort the emerging refining market.
Subsidised petrol could create pricing advantages that affect competition between local producers.
It could also discourage further private investment in refining if government controls prices again.
Moreover, Nigeria could face renewed pressure to fund the gap between production costs and pump prices.
That burden would ultimately affect government revenue and spending priorities.
Who Would Pay for a New Subsidy?
This remains one of the biggest questions surrounding the proposal.
If petrol sells below its economic cost, the government must cover the difference.
That money must come from somewhere.
The government could use federation revenue or borrow funds to finance the programme.
It could also reduce spending on infrastructure and social services.
In addition, lower government revenue could affect allocations to states and local governments.
Therefore, Nigerians need to know the projected annual cost before supporting such a policy.
Subsidy Could Increase Fiscal Pressure
Nigeria has previously spent enormous sums supporting petrol prices.
At various periods, subsidy financing also involved borrowing and other public-sector arrangements.
The system created significant financial obligations for the government and the former NNPC structure.
Critics argue that repeating the model could recreate similar fiscal problems.
They also warn that subsidy payments require strong monitoring to prevent fraud and abuse.
Consequently, any proposed subsidy programme must include strict transparency measures.
Domestic Refining Could Support Energy Security
Nigeria’s growing refining capacity offers an alternative path.
Instead of spending scarce foreign exchange on imported petrol, local refineries can process domestic crude.
That approach could support energy security and reduce import dependence.
It could also create more jobs across the petroleum value chain.
Furthermore, local refining can support related industries, logistics and manufacturing.
However, the government must ensure that competition remains fair and efficient.
CNG Offers Another Route to Cheaper Transport
The rising cost of petrol has placed significant pressure on Nigerians.
Transportation costs have also increased alongside energy prices.
The Federal Government has therefore promoted Compressed Natural Gas (CNG) as an alternative fuel.
CNG can offer lower operating costs for some vehicles compared with petrol.
Businesses and transport operators can benefit from converting suitable vehicles to CNG.
However, consumers will only feel the full benefit when operators pass lower energy costs to passengers.
Subsidy Debate Must Focus on Affordability
There is no doubt that petrol prices affect Nigerian households and businesses.
Higher fuel prices can increase transportation, food and operating costs.
Therefore, the government must continue seeking ways to reduce the burden.
However, permanent fuel subsidies may not provide the most sustainable solution.
Instead, Nigeria could strengthen domestic refining, expand CNG adoption and improve competition.
The government could also target relief towards vulnerable households rather than subsidising every litre of petrol.
Atiku Needs to Explain the Funding Plan
Political promises require clear fiscal calculations.
Therefore, Atiku’s proposal should answer several important questions.
How much would the subsidy cost annually?
Which revenue source would finance it?
Would the government borrow to fund the programme?
Would existing petroleum laws require amendments?
How would officials verify subsidy claims?
What safeguards would prevent the abuse seen under previous arrangements?
These questions matter because subsidy policies affect the entire economy.
Nigeria Must Look Beyond the Old Petroleum Model
Nigeria’s petroleum industry cannot be viewed through the realities of the past.
The country now has growing domestic refining capacity.
It also has a more market-driven downstream sector.
At the same time, the government faces significant demands for infrastructure and social investment.
Therefore, policymakers must weigh immediate relief against long-term fiscal stability.
The country needs affordable energy, but it also needs sustainable public finances.
Conclusion
Atiku Abubakar has the constitutional right to propose a different economic direction for Nigeria.
However, Nigerians deserve full details about the financial and legal implications of restoring petrol subsidies.
The subsidy debate should focus on affordability, transparency and economic sustainability.
Most importantly, policymakers should consider Nigeria’s changing petroleum landscape.
The country should strengthen domestic refining and reduce dependence on imported fuel.
It should also expand cheaper energy alternatives such as CNG.
Ultimately, any policy that promises cheaper petrol must explain who will pay the bill.
Nigeria cannot afford to repeat a system that creates hidden fiscal costs and weakens long-term economic stability.
