NIGERIA CAN AFFORD FUEL SUBSIDY:
ADC DEMOLISHES PRESIDENCY’S ATTACK ON ATIKU’S FUEL SUBSIDY PLAN
Mallam Bolaji Abdullahi
The African Democratic Congress (ADC) has taken note of the Presidency’s desperate but clumsy attempt to discredit the petroleum-policy plan of the ADC Presidential Candidate, Alhaji Atiku Abubakar, by claiming that restoring a petrol subsidy to support a pump price of about ₦600 per litre could cost Nigeria approximately ₦19.1 trillion annually.
We are at a loss how the presidency conjured up this phantom figure. But we do not agree with it. In trying to discredit Atiku’s proposal as unrealistic, the president’s men fail to address its fundamental principle, which is that Nigerians cannot afford the cost of unsubsidised fuel. Instead, they construct a hypothetical $40-per-barrel subsidy scenario, extrapolate it to an annual figure of ₦19.1 trillion and then attack that figure. That is classic straw man argument, the presidency attacking the model it created by itself, and passing it off as an attack on the opponent’s position. That is dubious.
The Presidency’s own spokesman acknowledged that their calculation of N19.1 trillion rests on assumptions of approximately $80 crude and a $40-per-barrel subsidy differential. The published report also makes clear that those assumptions were not independently verified. Yet, it is on this unverified claim that they have based their entire argument against a subsidy plan intended to make life easier for Nigerians.
FIRST, LET THE PRESIDENCY PROVE THE ₦19.1 TRILLION CLAIM
The ADC does not concede that implementing the AERP would cost ₦19.1 trillion annually, because it does not. And nothing they have said so far suggests they have a proof for concluding that it does. Instead, what we see is fiscal scare-mongering.
What Atiku proposes is fundamentally different from the old subsidy regime. It is a complete step-change that moves subsidy away from imported finished petroleum products toward domestic production through a controlled crude-feedstock incentive for local refineries, based on a benchmark-and-ceiling principle.
At the beginning of a budget cycle, government establishes a benchmark crude price consistent with the targeted maximum domestic petroleum-product price. If the market price of crude is at or below that benchmark, there is no subsidy. If the market price rises above the benchmark, the intervention covers only the qualifying upward differential, subject to an approved fiscal ceiling. That is not a permanent $40-per-barrel entitlement. Therefore, the Presidency cannot simply take its own $40 assumption, multiply it across an assumed volume and announce the resulting number as the cost of Atiku’s subsidy plan.
SECOND, THE PRESIDENCY IS ATTACKING THE OLD IMPORT-SUBSIDY MODEL, NOT THE ATIKU PLAN.
This distinction is fundamental. Nigeria’s former subsidy regime largely operated around the economics of imported finished petroleum products. Atiku subsidy changes the object of intervention. It proposes a subsidy for production input—domestic crude feedstock supplied to qualifying Nigerian refineries within Nigeria.
The old model subsidy model was:
import crude-derived products → spend foreign exchange to subsidise the product → consume.
The Atiku production subsidy model is:
Nigerian crude → Nigerian refinery → Nigerian petroleum products → Nigerian consumption → surplus regional exports.
While the old model entrenches import dependence, the Atiku model seeks to build and strengthen domestic production capacity. While the old model spends foreign exchange importing petroleum products, the Atiku model seeks to conserve foreign exchange by producing those products locally. While the old model is vulnerable to the opacity historically associated with import volumes, landing costs and subsidy claims; the Atiku model will transparently track the physical barrel from crude allocation through refinery intake, production and domestic distribution.
What the Presidency is attacking therefore is the old subsidy regime that Atiku is seeking to replace, not Atiku’s plan.
THIRD, THE PRESIDENCY HAS NOT ANSWERED THE QUESTION OF WHAT THE PRESENT SYSTEM IS ACTUALLY COSTING NIGERIANS
This is where the government’s argument becomes deeply problematic. The Presidency wants Nigerians to focus exclusively on the hypothetical cost of Atiku’s subsidy plan rather than the true cost of their own policy, which they have done everything to disguise.
ADC is asking Nigerians to look at the full ledger. NNPC’s audited 2024 accounts recorded approximately ₦7.13 trillion under Energy Security. The figure has generated substantial public scrutiny because it sits alongside other fuel-related costs and receivables, bringing the broader petroleum-related exposure reported in the accounts to roughly ₦17.5 trillion, depending on the accounting categories included.
The ADC is not suggesting that those figures translated to the cost of the conventional petrol subsidy. But the government has a responsibility to explain clearly, transparently and accountably what these enormous petroleum-related expenditures represent, what Nigerians received for them and what economic value they created. Instead, Nigerians are being told that a carefully designed domestic-production intervention is irresponsible because a Presidential aide has constructed a ₦19.1 trillion hypothetical scenario.
The question is:
WHAT DOES THE GOVERNMENT’S MULTI-TRILLION-NAIRA PETROLEUM INTERVENTION MEAN AND WHY HAS IT THE HUGE EXPENDITURE NOT SUBJECTED TO ANY FISCAL AND VALUE-FOR-MONEY SCRUTINY?
HOW MUCH IS TOO MUCH TO SPEND IN MAKING LIFE BETTER FOR NIGERIANS?
This is the question the Presidency has conspicuously avoided. Suppose, for the sake of argument, that the Atiku subsidy plan actually required ₦19.1 trillion annually to deliver, which it does not, let’s look at what Nigerians would get in return, and ask whether it would be worth the cost or not?
If the answer is cheaper petrol, lower transportation costs, lower cost of food, lower cost of living generally, lower logistics costs, lower manufacturing costs, greater domestic refining, reduced petroleum imports, reduced foreign-exchange demand, increased industrial activity, employment, tax revenue and eventual refined-product exports, if the cost is ₦19.1 trillion is the cost of prioritizing the well-being of Nigerians, it certainly makes both economic and social sense that the mindless profligacy going on under this administration, which ensures that government gets richer and the people get poorer.
FIFTH, THE GOVERNMENT’S OWN POLICIES DESTROY ITS CLAIM THAT INCENTIVES ARE INHERENTLY IRRESPONSIBLE
The contradiction becomes even more glaring when the Presidency’s own petroleum policy is examined. President Tinubu has signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order 2026.
The Order provides standard production tax credits capped at $3 or $4.50 per barrel, depending on qualifying project conditions, and permits supplementary credits that can take the aggregate production tax credit to $11.50 per barrel for qualifying oil projects.
In doing this, the government’s rationale is straightforward: provide an incentive today to attract investment in the oil sector. No matter how government wants to spin it, that is a form of subsidy to investors in the oil sector. And Nigeria will pay for it in forgone future revenue to government.
The ADC agrees with the underlying economic principle. But the question is this: why does it make sense for government to prescribe subsidy for oil investors but considers subsidy of fuel that will make life better for Nigerians irresponsible? If Nigeria can provide a production-linked fiscal incentive of up to $11.50 per barrel to stimulate offshore oil production, why is a carefully controlled crude-input incentive for domestic refineries dismissed as economic madness when its objective is to make fuel cheaper for Nigerians and build domestic refining capacity?
The government cannot simultaneously argue that “fiscal incentives (subsidy) stimulate investment and national development”, but “fiscal incentive (subsidy) for domestic refining is inherently wasteful.” That is either hypocrisy or insensitivity, or both. What makes incentives to oil investors good, but incentives to local refineries to deliver cheaper fuel for Nigerians bad?
SIXTH, WHAT ABOUT THE ₦34 TRILLION IMPORT-WAIVER ISSUE?
The ADC equally urges Nigerians to examine the government’s extensive use of import-duty exemptions. The Nigeria Customs Service disclosed that Import Duty Exemption Certificate approvals reached approximately ₦34 trillion. The precise interpretation matters: this represents the value of approved exemptions, not necessarily ₦34 trillion of cash expenditure by government. Customs has also indicated that a substantial portion related to military hardware, while other exemptions covered areas including CNG, healthcare and industrial equipment.
Although this does not involve direct financial outlay, it presumably represents forgone revenue in pursuing other important national objectives. It demonstrates the government’s own recognition that foregoing revenue can be justified where government expects a wider economic or social return. That is precisely the principle that the Atiku subsidy plan invokes.
If government can forgo revenue to encourage investment, manufacturing, security equipment, healthcare and other policy objectives, why must a production incentive aimed at lowering the energy cost of more than 240 million Nigerians be so cynically dismissed? Again: the question is not whether Nigeria can afford an incentive. The question is what the government considers as priority and whether the incentive produces sufficient national value to justify its cost.
SEVENTH, THE PRESIDENCY IGNORES THE FOREIGN-EXCHANGE DIVIDEND
The N19.1 trillion argument is also incomplete because it looks at the intervention from only one side of the balance sheet. Domestic refining has a foreign-exchange dividend. Every petroleum product Nigeria does not import is foreign exchange Nigeria does not need to spend on that import. Every barrel refined domestically retains more value within the Nigerian economy. Every surplus refined product exported potentially earns foreign exchange. This is the structural transformation Nigeria should be pursuing, and this is what Atiku is proposing.
For decades, the absurdity has been: export crude → import refined products → spend scarce foreign exchange → transmit the cost into the Nigerian economy.
The Atiku plan seeks to reverse that: produce crude → refine domestically → consume domestically → industrialise → export surplus products → earn foreign exchange.
The Presidency has calculated the alleged cost. Where is its calculation of the foreign-exchange savings? Where is its calculation of the industrial multiplier? Where is its calculation of the cost of maintaining the status quo? Without those calculations, its fiscal argument is incomplete.
EIGHTH, CHEAPER ENERGY IS NOT JUST A PETROL POLICY
The Presidency’s argument also treats the issue as though the only beneficiary of cheaper petrol is the person standing at a filling station. That is simplistic, and they know that. Petroleum prices affect: transportation, food distribution, agriculture, manufacturing, construction, logistics, retail and household purchasing power. When fuel becomes more expensive, the entire economy feels the shock. A truck transporting food pays more. A farmer transporting produce pays more. A manufacturer moving raw materials pays more. A business running logistics pays more. The consumer ultimately pays for all of it.
Therefore, reducing the domestic cost of petroleum products produces economy-wide benefits far beyond the pump. Therefore, arguing that subsidy disproportionately benefits only the car owners is therefore regressive is a faulty argument that fails to acknowledge the ripple effect of increased cost of fuel across the economic ecosystem. The Atiku subsidy plan must therefore be assessed against its economy-wide multiplier effect, not simply the nominal fiscal cost of the crude discount.
NINTH, THE PRESIDENCY HAS NOT CALCULATED THE COST OF DOING NOTHING TO HELP SUFFERING CITIZENS
This is perhaps its greatest analytical omission. Dismissing an idea is not in itself an alternative idea. Every economic policy has a counterfactual. The government has calculated what it says the Atiku subsidy might cost. But what does the continuation of the current trajectory cost Nigeria? What is the cost of permanently high transport fares? What is the cost of higher food distribution costs? What is the cost of imported petroleum products? What is the cost of foreign-exchange demand? What is the cost of suppressing domestic industrial competitiveness? What is the cost of refinery under-utilisation? What is the cost of failing to build Nigeria into a regional refining hub? What is the cost to household disposable income? What is the cost to Nigerian manufacturers?
Doing nothing is not free. It is ultimately more expensive. The Presidency has simply failed to put a number on the cost of its preferred alternative, which is to leave citizens to fend for themselves and do nothing other than telling them to continue to endure.
TENTH, A FICTITIOUS NUMBER IS NOT AN ECONOMIC ARGUMENT
For the Presidency to begin to make sense, they must demonstrate:
- That the Atiku subsidy plan actually requires ₦19.1 trillion to implement;
- That the assumed $40-per-barrel intervention, which forms the basis for their calculation is stated by Atiku in his plan;
- That the intervention would apply to the entire volume that they have assumed;
- That the gross fiscal cost exceeds the economic benefits;
- That the foreign-exchange savings do not materially offset the cost;
- That the domestic industrial multiplier is insignificant; and
- That their current strategy of removing subsidy and doing nothing for the people actually produces greater national returns.
The Presidency has established none of these propositions. Instead, it has produced a headline number. Nigeria deserves an economic model, not a political talking point.
ELEVENTH, THE “BILLIONAIRE FRIENDS” ARGUMENT IS A DISTRACTION
The Presidency has suggested that Atiku’s proposal could put money in the hands of wealthy refinery owners. But this is not an argument for putting money in the hands of nobody except government and their cronies. At best, it is an argument that alerts to possible risks that Atiku’s proposal faces. But the counter-measures recommend themselves: Design the policy to prevent rent capture; make the crude discount conditional, make refinery intake measurable; make production auditable; make domestic delivery compulsory, make pricing transparent; track every barrel; reconcile crude received against products produced; impose claw-backs and penalties for diversion; ensure that benefits reflect in domestic pricing; apply the same rules to public and private refineries.
This is why regulations exist. The existence of a private-sector beneficiary does not make a public policy illegitimate. The question is whether the Nigerian public receives a commensurate benefit. The same principle applies to every investment incentive currently granted by this government.
TWELFTH, ATIKU PLAN IS NOT A RETURN TO THE OLD SUBSIDY REGIME
The Presidency keeps invoking the old subsidy regime. That is politically convenient but analytically dubious. The old system was vulnerable to import arbitrage, opacity and unverifiable claims. The Atiku plan proposes: a production-linked intervention; a benchmark price; a fiscal ceiling; verified refinery capacity; verified crude intake; verified product output; domestic-supply obligations; digital tracking; anti-arbitrage measures; equal eligibility rules; and a progressive phase-down as domestic refining becomes competitive.
The question under the old subsidy system was: “How many litres did you import?” The question under the Atiku subsidy plan would be: “Where is the barrel, what did it produce and where did the product go?” That is not a return to the old regime. It is a redesign of the subsidy architecture.
THIRTEENTH, THE PRESIDENCY IS BEING CLEVER BY HALF ABOUT THE $40-PER-BARREL CLAIM
The Presidency is being clever by half when it suggests that a barrel of crude imported into Nigeria for refining at an assumed cost of $80 actually lands at a Nigerian refinery within that same cost structure. It then implies that supplying local crude to Nigerian refineries at an international spot price of $80 must contain an inbuilt subsidy of $40 per barrel, representing the opportunity cost to the Federation Account Allocation Committee (FAAC), and uses that assumption to project a cumulative annual loss of ₦19.1 trillion. But that is a barefaced lie.
The landing cost of an imported barrel of crude in the product-cost economics of a local Nigerian refinery includes additional expenses such as shipping, insurance, cost of foreign exchange and other associated freight costs. Those costs do not arise in the same way when a barrel of local crude feedstock is supplied locally.
In any case, section 109(2) of the Petroleum Industry Act, already establishes the regulatory framework for operationalising the Domestic Crude Supply Obligation in furtherance of Nigeria’s energy security needs, which empowers the NUPRC to design and enforce the regulations to achieving domestic supply of crude. The Atiku proposal is anchored on a plan to implement this legislation, together with other enabling laws, to provide incentives that support domestic refining, reduce production costs and make petroleum products more affordable in Nigeria.
This plan would be neither arbitrary nor based on assumptions. It would be based on empirical evidence, supported by live local-refining production costs for a discounted local barrel of crude—not the cost of an imported barrel. That is why Atiku says his subsidy plan would follow the barrel.
THE PRESIDENCY HAS THEREFORE MISSED THE ENTIRE POINT
The Presidency believes it has asked Atiku a killer question: “Where will the money come from?” The ADC has an even more devastating question for the Presidency:
WHERE IS NIGERIA’S MONEY CURRENTLY GOING, WHAT PUBLIC VALUE IS IT PRODUCING, AND WHAT IS THE OPPORTUNITY COST?
If the government can tolerate multi-trillion-naira petroleum-related expenditures, approve enormous import-duty exemptions, and introduce upstream production tax credits reaching $11.50 per barrel, then it cannot honestly pretend that the only fiscal principle governing Nigeria is: “Never intervene.” This government does intervene; they only choose where to intervene, and on whose behalf. This government understands calculated incentives; they only chose whom to incentivize, and for what ends?
Therefore; the debate is not: SUBSIDY OR NO SUBSIDY. The debate is: WHAT SHOULD NIGERIA SUBSIDISE, WHY, AND FOR WHOM?
The ADC answers: What Nigerians need is cheaper fuel, because Nigerians are too poor not to be subsidised. Nigerian crude should create Nigerian value for Nigerians.
We therefore challenge the government to demonstrate that its only policy position produces better outcomes for Nigerians. They should start by demonstrating why an upstream production incentive of up to $11.50 per barrel is economically defensible while a controlled domestic-refining production incentive is irresponsible.
Until they are able to do this, Atiku’s plan remains the only deal on the table for Nigerians to consider. And by seeking to discredit it without tabling another plan that speaks to the lived reality of Nigerians, attacking Atiku’s plan only betrays government’s confusion and panic. It demonstrates that government is only uncomfortable with a policy that insists that the fundamental obligation of government is to place Nigerian citizens at the heart of its fiscal priorities.
The ADC’s position is clear:
Nigeria does not need another opaque subsidy regime. What Nigeria needs is a transparent production-support regime. We do not propose to subsidise waste. What we propose to subsidise production that directly improves capacity. We do not propose to subsidise import dependence; what we propose is to subsidise domestic value addition. We do not propose an open-ended cheque. We propose a capped, audited and traceable intervention. And if the Presidency truly believes that even such an intervention is too expensive, then it must answer the question it has so far avoided:
WHY IS CHEAPER ENERGY FOR NIGERIANS LESS DESERVING OF PUBLIC INVESTMENT THAN THE OTHER MULTI-TRILLION-NAIRA EXPENDITURES THAT THIS GOVERNMENT HAS MADE?
That is the real debate.
And Nigerians deserve a clear answer.
Mallam Bolaji Abdullahi
National Publicity Secretary
African Democratic Congress (ADC)
