Fuel subsidy: Atiku camp proposes production-based model, targets ₦500 petrol

Mercy Iheoma Ihedigbo

The camp of former Vice President Atiku Abubakar has accused the administration of President Bola Tinubu of removing petrol subsidy from ordinary Nigerians while allegedly granting waivers and incentives to selected businesses and multinational companies.

It also said petrol could sell for about ₦500 per litre for several years under a proposed production-based subsidy model that would direct government support towards domestic refineries rather than petroleum importers and marketers.

The claims were made by Phrank Shaibu, Senior Special Assistant on Public Communication to Atiku Abubakar, during an interview on Frontline, a current affairs programme on Eagle 102.5 FM, Ilese-Ijebu, Ogun State.

Shaibu alleged that while the Federal Government claimed to have removed fuel subsidy, it was simultaneously granting what he described as waivers worth about ₦34 trillion to friends, associates and multinational companies.

“Tinubu claims he has removed fuel subsidy. This same man is using the same money to give waivers to his friends and multinational companies,” Shaibu said.

He questioned the beneficiaries of the alleged waivers, arguing that the resources could instead be deployed to support domestic refining and reduce the cost of petroleum products.

Shaibu also criticised the manner in which the Tinubu administration announced the removal of petrol subsidy in 2023, arguing that the policy was implemented without adequate preparation.

He recalled President Tinubu’s declaration at his May 29, 2023, inauguration that “subsidy is gone,” and argued that the immediate effect was a sharp increase in the cost of living.

According to Shaibu, Atiku’s proposed approach would be fundamentally different from the previous subsidy regime because government support would be tied directly to domestic crude production and refining.

“Under Atiku’s proposal, the subsidy follows barrel, not the marketer. Our support is tied directly to crude supply to qualifying domestic refiners,” he said.

He explained that every barrel supplied to participating refineries would be tracked, with the corresponding benefit expected to be reflected in the final pump price.

“With every barrel tracked and the benefit required to reflect in the pump price. The benefit will be tied to the pump price,” he added.

Shaibu further claimed that if resources allegedly associated with import waivers were redirected towards domestic refining, petrol could be sold at about ₦500 per litre for four and a half to five years.

“Do you know that if we give that import waiver of 34 trillion to Dangote, my dear brother Atiku would force down the price of petrol to 500 Naira for the next five years,” he said.

He maintained that the proposal was not designed to create a permanent subsidy regime but to provide temporary support while Nigeria develops a stronger domestic refining industry.

“Subsidy is all over the world. It’s not designed to be there forever, but you must create stability,” Shaibu said.

He argued that increased domestic refining, combined with competition among refineries, would eventually reduce the need for government intervention and create greater stability in the downstream petroleum sector.

According to him, the proposed model would also include measures to prevent subsidised crude or petroleum products from being diverted.

Shaibu said an Atiku administration would seek legislative backing for the scheme and introduce greater transparency through technology.

He proposed a mobile application that would allow Nigerians to monitor crude allocations to refineries, production levels and the movement of refined products.

“The moment crude is given to a particular refinery, this is the quantity of crude given to this refinery. You can track it from production until the finished products are delivered to the people,” he said.

Shaibu argued that lower fuel prices would have a wider impact on the Nigerian economy because transportation, agriculture, manufacturing and distribution all depend heavily on energy.

Using rice production as an example, he said cheaper petrol and diesel would reduce the cost of transporting agricultural produce, milling rice and distributing finished products to markets.

He also said an Atiku administration would support farmers with the necessary inputs and provide security to enable them return to their farms.

According to him, increased agricultural production and lower energy and transportation costs would ultimately help reduce food prices.

Shaibu also pointed to the potential contribution of other domestic refineries, including modular refineries and the proposed BOA Refinery.

“Dangote Refinery is not the only one that owns a refinery in Nigeria,” he said.

He expressed optimism that additional domestic refining capacity would enable Nigeria to meet a larger proportion of its petroleum needs and reduce dependence on imported products.

Shaibu also defended Atiku’s current position on petrol subsidy, following criticism that the former vice president had previously supported a gradual removal of subsidy.

He argued that economic conditions had changed since the 2023 presidential election and that Atiku’s current proposal was a response to the economic realities created by the immediate removal of the subsidy.

“Are other things still equal? No, sir. Other things are no longer equal,” he said.

He rejected the suggestion that the proposal amounted to a return to the old subsidy system, stressing that the key difference was that government support would be linked to domestic production rather than petroleum marketers and imported products.

“The subsidy follows the barrel, not the marketer,” he reiterated.

The proposal comes amid renewed political debate over the future of petrol pricing and subsidy policy ahead of the 2027 presidential election, after Atiku announced plans to restore fuel subsidy if elected president.

The proposal has attracted criticism from supporters of the Tinubu administration and is likely to remain a major issue in the debate over Nigeria’s economic direction, energy policy and the impact of fuel prices on households and businesses.