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The Nigerian presidency has described former Vice President Atiku Abubakar’s proposal to restore fuel subsidy as retrogressive and against the genuine interest of Nigerians, accusing the opposition candidate of political desperation.
Presidential spokesperson Bayo Onanuga said in a statement on Thursday that Atiku had withdrawn his previous support for subsidy removal after his 2023 election defeat.
“Even though he used to believe that the subsidy regime must be eliminated, a point he canvassed in the run-up to his defeat in the 2023 election, he has now opportunistically recanted the major plank of his economic doctrine and turned a renegade,” Onanuga said.
He added, “It is not difficult to explain why Atiku has latched onto the abandoned subsidy regime, five months to the election. Desperate for power, he needed to make a promise that he knew, if he were candid with our people, does not make fiscal sense, is retrogressive, and is against the genuine interest of the people.
“But before his suggestion hoodwinks the people, we must quickly subject the promise to a serious examination, especially in the context of Nigeria’s present economic and petroleum realities.”
Atiku, presidential candidate of the African Democratic Congress, during a Facebook Live session while responding to questions on the removal of the petrol subsidy and how the savings from the policy had been utilised.
“I initially did not oppose the removal of the fuel subsidy. But now that it has been removed, where is the money? Where has the subsidy money gone? Has it been used to improve healthcare, education or security?” Atiku asked.
He added, “If I win the presidential election, I will restore the subsidy. And anyone who stole Nigeria’s subsidy funds must return the money.”
Subsidy ‘not money sitting in treasury’
Onanuga explained that the old subsidy regime was not a simple government discount but a system in which the NNPC sold fuel below cost, leading to under-recovery and massive losses.
“First, we must clear some ambiguities about the so-called subsidy. It is not some money sitting in the treasury to be disbursed to offer cheap fuel to Nigerians. It is the massive discount the NNPC offered the Nigerian government: selling fuel it bought at N100 at N50 at the pump, leading to under-recovery of costs and massive losses,” Onanuga said.
“Somewhere in the NNPC books are still trillions of Naira in subsidy costs that the Nigerian government has not paid. Contrary to Atiku’s claim in his interview, no N30 trillion subsidy windfall or savings exists anywhere except in his imagination,” he added.
The Petroleum Industry Act scheduled subsidy removal by June 2023, with Tinubu accelerating the process “to stop further bleeding before the due date,” Onanuga said.
The presidency said the emergence of domestic refining, including the Dangote Refinery, had transformed Nigeria’s petroleum sector.
“Indeed, the Dangote Refinery would not have kickstarted production for local consumption were the subsidy regime operative. This is an important point that Atiku deceptively ignored,” Onanuga said.
He warned that restoring subsidy could threaten smaller local refineries, cause job losses and undermine the country’s growing exports of refined products.
“Atiku’s proposal portends a reversal of current local production, and it will spell bankruptcy for smaller local refineries like Aradel’s, causing attendant job losses and a loss of foreign exchange,” Onanuga said.
He also noted that the N15 trillion that would have been borrowed to fund subsidy discounts had instead gone into government coffers, with the three tiers of government sharing about N3 trillion in July alone.
“The N15 trillion that would have been borrowed and spent on selling discounted petrol has now significantly gone into the coffers of the three tiers of government. Now all states are fiscally stable and can pay salaries regularly and embark on infrastructure projects,” Onanuga said.
“In July, the three tiers shared about N3 trillion, a record, from the federation account. That is a major achievement, since the abolition of petrol price discount and distortions in the foreign exchange regime.”
Atiku challenged to provide fiscal details
Onanuga called on Atiku to explain how a restored subsidy would be financed and implemented under the current market structure.
“In practical terms, therefore, Nigerians should ask a straightforward question: If the subsidy is restored, who pays for it? What will the new pump price be? N200 or N500?” Onanuga asked.
“If petrol is sold below its economic cost, which is about N1,200 to N1,300, someone must absorb the difference. Ultimately, that cost falls on the public finances—through reduced funds for infrastructure and social services, reduced allocation to states and 774 local councils, increased borrowing, higher public debt, or some combination of these.”
The presidency also questioned which component of the value chain would be subsidised given Nigeria’s increased domestic production.
“Political promises must be backed by fiscal arithmetic,” Onanuga said.
“Alhaji Atiku Abubakar is entitled to propose a different economic direction. Specific answers should accompany any promise to restore fuel subsidy. How much will the programme cost annually? What revenue source will finance it? Will the government borrow to fund it? Will the National Assembly be asked to amend existing PIA legislation and petroleum-sector rules? How will subsidy payments be verified and protected from abuse, as witnessed some years ago?”
