By Joy Yesufu
The Presidency has criticised former Vice President Atiku Abubakar’s proposal to restore petrol subsidy, describing the policy as fiscally unsustainable and a possible reversal of ongoing reforms in Nigeria’s petroleum sector.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga, in a statement on Thursday, challenged the former vice president to explain how his proposed subsidy regime would be funded and implemented under the current petroleum sector framework.
According to Onanuga, while Atiku has the constitutional right to propose alternative policies, Nigerians deserve to know the financial, legal and administrative implications of restoring petrol subsidy.
He said the subsidy regime dismantled in 2023 had imposed a significant burden on public finances and contributed to distortions in the petroleum and foreign exchange markets.
“The subsidy debate must therefore be grounded in the realities of today’s market rather than treated as though Nigeria’s petroleum sector has remained unchanged,” Onanuga said.
The Presidency argued that the petrol subsidy regime previously operated by the government was not simply a discount to consumers but involved the public sector absorbing the difference between the regulated pump price and the actual cost of supplying petrol.
It said restoring the arrangement would require the government to identify a sustainable source of funding for the price difference.
Onanuga said the government would therefore want Atiku to explain how much the proposed subsidy would cost annually, what revenue source would finance it, whether borrowing would be required, and how subsidy payments would be protected from abuse.
He also questioned whether the proposal would require amendments to existing provisions of the Petroleum Industry Act, which provided for the removal of petrol subsidy by the end of June 2023.
President Bola Tinubu accelerated the implementation of the policy shortly after assuming office in May 2023.
The Presidency said Nigeria’s petroleum industry had changed considerably since then, particularly with the expansion of domestic refining capacity.
It cited the Dangote Refinery as a major development that had strengthened local production of refined petroleum products and reduced Nigeria’s dependence on imported petrol.
According to Onanuga, the shift towards domestic refining offers opportunities for improved energy security, foreign exchange conservation, industrial development and job creation.
He argued that returning to a government-funded price discount could undermine those gains if the policy resulted in renewed distortions in the petroleum market.
“Political promises must be backed by fiscal arithmetic,” Onanuga said, urging Atiku to provide Nigerians with details of the proposed policy.
He asked: “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?”
The presidential aide also questioned what a restored subsidy would actually cover in an increasingly domestically supplied market, asking whether it would subsidise local production, transportation, distribution or another component of the petroleum value chain.
He said the government recognised the hardship caused by higher petrol, transportation and energy costs and was pursuing alternative measures to reduce the burden on households and businesses.
Among such measures, he cited the Federal Government’s promotion of Compressed Natural Gas (CNG) as a cheaper alternative fuel for vehicles.
According to the Presidency, wider adoption of CNG by commercial buses, taxis, trucks and other vehicles could help reduce transportation and energy costs.
Onanuga said sustainable relief for Nigerians should not involve recreating a system that placed an unpredictable burden on public finances.
He urged political actors to engage in a robust debate on the cost of living and economic policy but insisted that proposed solutions should reflect the current realities of Nigeria’s petroleum sector.
“Nigeria cannot afford to return to policies whose costs are hidden from citizens until they appear later as debt, reduced government spending on social services and further pressure on the national currency,” he said.
The Presidency therefore challenged Atiku and other political actors advocating the return of petrol subsidy to provide Nigerians with the full fiscal and legal implications of their proposals.
