The Independent Media and Policy Initiative (IMPI) has described plans by former Vice President Atiku Abubakar to restore fuel subsidy, if elected President, as a populist proposal that may create more financial and economic problems for Nigeria in the long run.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, the think tank noted that although the proposal would initially lead to a reduction in fuel prices, it would ultimately bankrupt the country.
IMPI said: “This reckless, populist proposal represents a dangerous step backwards and a financial trap that would bankrupt Nigeria, destroy the country’s sovereign credit ratings, and wipe out the economic progress made over the past three years.
“Atiku’s proposal to re-regulate prices not only directly undermines the Petroleum Industry Act (PIA) 2021, but also creates an illusion of price reduction.
“Fixed price caps remove commercial incentives for marketers to distribute fuel to remote areas; consequently, fuel supplies would shift to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt.”
The policy think-tank said the proposal could send a negative signal to international investors by suggesting that Nigeria was returning to regulated petrol pricing after the Federal Government had spent more than three years pursuing deregulation of the downstream oil sector.
Atiku, in his proposed economic recovery plan, had advocated a shift from consumption subsidy to production subsidy, with local refineries receiving crude at a discounted price to enable them to sell refined petroleum products at lower prices to consumers.
However, IMPI argued that the proposed model could create uncertainty for investors if commercial operators were required to comply with politically determined pricing arrangements.
Akinsiju said the proposal would require eligible public and private refineries to receive domestic crude allocations at discounted prices on the condition that the savings were passed on to consumers.
He, however, described the arrangement as convoluted, arguing that it could compel operators, including the Nigerian National Petroleum Company Limited and private refineries, to work within politically mandated pricing formulas.
“Atiku’s proposal also sends signals to global markets that Nigeria lacks regulatory predictability. This policy shift would scare away international capital and freeze modern Public-Private Partnerships, with repercussions for funding critical legacy infrastructure projects and a damning effect on production and productivity,” he said.
The group further argued that re-regulating petrol prices would undermine the Petroleum Industry Act, which established a framework for a commercially driven downstream petroleum sector.
According to Akinsiju, the proposed intervention could create an “illusion of price reduction” while transferring the cost of the subsidy from direct government payments to discounted crude oil allocations.
“Atiku’s proposal to re-regulate prices not only directly undermines the Petroleum Industry Act 2021, but also creates an illusion of price reduction. Fixed price caps remove commercial incentives for marketers to distribute fuel to remote areas; consequently, fuel supplies would shift to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt,” he said.
The renewed argument over subsidy comes as Nigerians continue to grapple with the impact of the policy introduced by President Bola Tinubu in May 2023.
Tinubu announced the removal of petrol subsidy in his inaugural address on May 29, 2023, arguing that the policy had become unsustainable.
The decision immediately triggered a sharp increase in petrol prices and transportation costs. The PUNCH reported that petrol prices rose from N175 per litre in May 2023 to about N1,300 by May 2026, representing a 643 per cent increase.
The controversy has since centred on whether the fiscal gains from subsidy removal have sufficiently translated into improved living conditions for Nigerians.
The Federal Government has maintained that the policy freed significant resources for the three tiers of government. According to figures presented by the Finance Minister, Taiwo Oyedele, subsidy and foreign exchange reforms mobilised N15.8tn for the Federation between June 2023 and December 2025.
Of the amount, N5.43tn accrued to the Federal Government, N6.52tn went to states and N3.88tn to local governments. The government, however, clarified that the N15.8tn was not money sitting in a dedicated account, but additional resources mobilised within the wider fiscal system.
Backing the current model, IMPI argued that returning to a subsidised pricing model could recreate the fiscal problems associated with the old regime.
Akinsiju said Nigeria had historically suffered from deductions from oil revenues to fund subsidy before resources reached the Federation Account, thereby limiting funds available to states and local governments.
“Atiku’s model repeats this exact pattern. By giving discounted crude oil directly to local refineries, the government creates a massive hidden deduction.
“This directly reduces the revenue flowing into the Federation Account, stripping state and local government leaders of the liquid capital needed to build rural feeder roads, primary healthcare centres, and community water infrastructure,” he said.
The group also warned that price controls could result in shortages in remote areas and encourage the emergence of black markets. It said such a development could push transport costs higher and worsen food inflation, particularly for rural communities.
It maintained that the government should instead focus on investments capable of increasing productivity and reducing the structural cost of doing business.
“We reiterate that Nigeria’s historical infrastructure deficit cannot be solved by returning to the fiscal policies that created it,” Akinsiju said.
He added that Atiku’s proposed model could amount to replacing a direct cash subsidy with a discount on crude oil revenue.
“Atiku Abubakar’s ‘Follow-the-Barrel’ model replaces a cash subsidy with a crude oil revenue discount. This policy choice risks locking Nigeria back into the same historical cycle: prioritising temporary, popular relief at the pump, while sacrificing the high-quality roads, hospitals, schools, and energy networks required to build a productive national economy,” he said.
