Petrol subsidy: APC-PCC demands legal, fiscal clarity from Atiku
At his press conference in Abuja on Friday, Alhaji Atiku Abubakar reiterated his proposed “production subsidy” for locally refined petrol, which he said would reduce pump prices. He went further to ask President Bola Tinubu to slash the cost of diesel and petrol at the pump.
That proposal raises important legal, fiscal and practical questions that he must answer.
Section 205(1) of the Petroleum Industry Act 2021 provides that unrestricted free-market conditions shall determine wholesale and retail prices of petroleum products. The Nigerian Midstream and Downstream Petroleum Regulatory Authority, in a statement on Saturday, explained that it neither fixes pump prices nor issues administrative price templates, except where the statutory conditions for intervention are met. The PIA provisions guide its function. At the moment, “No such market failure has been declared,” NMPDRA said.
Atiku should therefore explain whether a refinery receiving his proposed subsidy would be required to sell petrol at a prescribed price.
If the answer is yes, he should identify the legal framework under which the government would impose that price condition and explain how it would operate consistently with the Petroleum Industry Act.
If the answer is no, he should explain how public support to refiners would guarantee lower prices at filling stations. Without an enforceable mechanism, refiners could receive the benefit while consumers continued to pay market prices.
Atiku must also disclose the cost of his proposal and how he would fund it.
His earlier statement suggested that the intervention could take the form of preferentially priced crude for domestic refineries. Any discount on crude would reduce the value accruing to the Federation and, consequently, the revenue available to the federal, state and local governments, triggering afresh the fiscal crisis that made 27 states unable to pay salaries and pensions before President Tinubu assumed office in 2023.
Based on publicly reported refinery throughput and domestic petrol-supply figures, the cost of the new subsidy could run as high as N17 or N21 trillion annually, depending on the discount size, the volume covered, and whether the support applies to the entire barrel or only to petrol sold domestically.
These assumptions must be clearly defined. Nigerians deserve to know:
- the proposed subsidy rate;
- the annual spending ceiling;
- the volume of crude or petrol to be covered;
- the source of funding;
- the mechanism guaranteeing lower pump prices;
- the safeguards against diversion, smuggling and fraudulent claims; and
- whether amendments to the Petroleum Industry Act would be required.
An appropriation by the National Assembly may authorise expenditure, but it would not by itself resolve every regulatory question arising under the Petroleum Industry Act. If Atiku intends to amend the law, he should say so plainly.
His latest position must also be reconciled with his previous support for downstream deregulation. In November 2022 at the Lagos Business School, Atiku described the petrol subsidy system as fraudulent and pledged to complete its removal. He reminded his audience that he chaired the committee that removed its first and second phases, and promised to complete the process. On 25 August 2026, he announced on X, “I will restore it!”
He must explain why he now advocates restoring subsidy in another form and how his proposed arrangement would avoid the abuse, scarcity, smuggling and fiscal losses associated with the old system.
Deregulation of the downstream petroleum sector began under the Obasanjo-Atiku administration. Diesel which powers food trucks, generators and factories was deregulated.
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