Presidency to Atiku: How will you fund proposed petrol subsidy?

The presidency has described former Vice-President Atiku Abubakar’s proposal to restore petrol subsidy if elected president in 2027 as “retrogressive”, accusing him of making the promise out of desperation for power.

On Wednesday, the African Democratic Congress (ADC) presidential candidate, said he would restore the petrol subsidy if elected president in 2027.

However, Bayo Onanuga, special adviser to President Bola Tinubu on information and strategy, said the proposal would return Nigeria to a subsidy regime that was “wasteful, corruption-ridden and financially burdensome”.

In a statement on Thursday, Onanuga said Atiku is entitled to propose alternative policies but argued that Nigerians deserved to know how his proposed subsidy would be funded and implemented under the current petroleum-sector framework.

He said Atiku’s position represented a reversal of his previous stance on petrol subsidy, noting that the former vice-president had advocated the removal of the subsidy before the 2023 presidential election.

“It is not difficult to explain why Atiku has latched onto the abandoned subsidy regime, five months to the election,” Onanuga said.

“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.”

‘NO N30TRN SUBSIDY WINDFALL’

The presidential aide disputed Atiku’s claim that the federal government had failed to account for about N30 trillion in savings and revenues from subsidy removal.

Onanuga said the N30 trillion figure did not represent subsidy savings, describing the former vice-president’s claim of a subsidy windfall as unfounded.

“Contrary to Atiku’s claim in his interview, no N30 trillion subsidy windfall or savings exists anywhere except in his imagination,” he said.

Onanuga said the subsidy regime involved the Nigerian National Petroleum Company Limited (NNPC) absorbing the difference between the cost of petrol and the regulated pump price, resulting in substantial costs to government.

He said the Petroleum Industry Act (PIA) established a framework for ending the subsidy regime by June 2023, adding that Tinubu only accelerated the process by a few weeks after assuming office.

He added that Nigeria’s petroleum sector had changed significantly since the removal of subsidy, particularly with the emergence of substantial domestic refining capacity.

Onanuga cited the Dangote Refinery as a major development that had altered the country’s dependence on imported petrol.

He argued that restoring the old subsidy system could undermine local refining and place smaller domestic refineries under financial pressure.

According to him, Nigeria is increasingly moving from reliance on imported refined products towards domestic refining, with potential benefits for energy security, foreign-exchange conservation and job creation.

“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,” he said.

‘WHO WILL PAY FOR SUBSIDY?’

Onanuga challenged Atiku to explain how much his proposed subsidy would cost and where the money would come from.

“If petrol is sold below its economic cost, which is about N1,200 to N1,300, someone must absorb the difference,” he said.

“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 presidential aide said the government recognised the hardship caused by higher petrol prices but argued that sustainable relief should not involve recreating a fiscal arrangement that previously placed significant pressure on public finances.

He cited the government’s compressed natural gas (CNG) initiative as an alternative aimed at reducing transportation and energy costs.

Onanuga urged Atiku and other political actors to provide clear fiscal and legal details for any proposal to restore petrol subsidy.

“Political promises must be backed by fiscal arithmetic,” he said.

He asked Atiku to explain the annual cost of the proposed programme, its funding source, whether the government would borrow to finance it, and whether amendments to existing petroleum-sector laws would be required.

“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.