By Seun Ibiyemi
The Independent Media and Policy Initiative (IMPI) has warned that former Vice President Atiku Abubakar’s proposal to restore petrol subsidy could undermine investor confidence and reverse gains made from deregulating Nigeria’s downstream petroleum sector.
The policy think-tank said the proposal could send a negative signal to local and international investors by suggesting that Nigeria was returning to government-controlled petrol pricing after more than three years of pursuing deregulation.
IMPI Chairman, Omoniyi Akinsiju, disclosed this in a policy statement issued in Abuja, arguing that the proposed production subsidy model could create regulatory uncertainty for operators and investors.
Atiku, the presidential candidate of the African Democratic Congress, has proposed replacing the former consumption subsidy with a targeted production subsidy under which local refineries would receive crude oil at discounted prices to enable them sell refined products at lower prices.
However, IMPI described the arrangement as potentially complicated, arguing that it could force public and private refineries to operate under politically determined pricing arrangements.
“Atiku’s proposal also sends signals to global markets that Nigeria lacks regulatory predictability,” Akinsiju said.
He warned that the proposed policy shift could discourage international capital and affect public-private partnerships required to finance major infrastructure projects.
Also argued that reintroducing price controls would undermine the Petroleum Industry Act (PIA) 2021, which established a commercially driven framework for the downstream petroleum sector.
According to Akinsiju, providing discounted crude to local refiners could create an “illusion of price reduction” because the subsidy would effectively be transferred from direct government payments to discounted crude allocations.
He further warned that fixed petrol price caps could discourage marketers from distributing products to areas where operating costs are high.
“Fixed price caps remove commercial incentives for marketers to distribute fuel to remote areas; consequently, fuel supplies would shift to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt,” he said.
The group maintained that such a development could worsen fuel shortages in rural communities and encourage the growth of black-market activities.
The renewed controversy comes amid continuing debate over the economic impact of President Bola Tinubu’s decision to remove petrol subsidy in May 2023.
READ ALSO:Atiku vows to restore petrol subsidy, says policy will support local refining
The policy triggered a sharp increase in petrol and transportation costs, with the price of petrol rising from N175 per litre in May 2023 to about N1,300 by May 2026, according to figures cited by IMPI.
The Federal Government has, however, defended the reform, arguing that subsidy removal and foreign exchange reforms have freed additional resources for the three tiers of government.
Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, said the reforms generated N15.8tn in additional resources for the Federation between June 2023 and December 2025.
Of the amount, N5.43tn accrued to the Federal Government, N6.52tn to states and N3.88tn to local governments.
The government has clarified that the N15.8tn was not money kept in a dedicated subsidy-savings account, but additional resources mobilised through the broader fiscal system.
