ATIKU’S “PRODUCTION SUBSIDY”: A NEW NAME DOES NOT ANSWER THE OLD ₦TRILLION QUESTION
By Gloria Fraser, MFR
Headlinenews.News Special Report
Atiku Abubakar has challenged critics of his proposed return of petrol subsidy to “show Nigerians the numbers.” It is an excellent challenge, except that the first person who must show Nigerians the numbers is Atiku himself.
The former Vice-President now says he is not proposing the discredited subsidy regime Nigeria abandoned in 2023. His alternative, described as a “production-anchored subsidy,” would allegedly support locally refined petrol, reduce transportation and logistics costs, stimulate domestic refining, create jobs and provide relief to consumers.
These are attractive objectives. But attaching the words “targeted,” “transparent” and “production-anchored” to a subsidy does not resolve the fundamental economic questions that made Nigeria’s previous subsidy regime fiscally dangerous.
How much will it cost? What quantity of petrol will government subsidise? At what benchmark price? Who receives the payment—the refinery, marketer or consumer? What happens when crude oil prices rise sharply? What happens when the naira depreciates? What prevents subsidised Nigerian petrol from being diverted across borders? What is the annual fiscal ceiling, and which expenditure will be reduced to finance it?
Until these questions are answered, Atiku has presented an aspiration, not an economic model.
THE SUBSIDY MAY HAVE CHANGED ITS NAME, BUT NOT ITS ARITHMETIC
Every subsidy ultimately creates a gap between the economic cost of a product and the price somebody is permitted to pay. That gap does not disappear because the product is refined in Nigeria.
Somebody must pay it.
If a Nigerian refinery can economically supply petrol at ₦1,200 per litre but government wants consumers to pay ₦900, the ₦300 difference must come from somewhere. Multiply that difference by millions of litres consumed every day and then by 365 days, and the attractive phrase “production subsidy” becomes a potentially enormous fiscal obligation.
This is precisely why Atiku’s challenge to critics is premature. He asks others to calculate the fiscal cost of a policy for which his campaign has not publicly supplied the essential variables.
Economists cannot responsibly cost a blank cheque.
The burden belongs first to the policy’s author. Atiku should publish the subsidy formula, projected daily consumption, benchmark crude price, exchange-rate assumption, beneficiary structure, duration, annual ceiling and source of financing. Nigerians can then compare the proposal with alternative uses of the same money.
That is what an “honest debate about economic policy” actually requires.
DOMESTIC REFINING IS ALREADY HAPPENING WITHOUT RESTORING PETROL SUBSIDY
The suggestion that Nigeria must restore subsidy before domestic refining can flourish is contradicted by developments already occurring under President Tinubu.
The Dangote Refinery has become a major domestic supplier and is currently buying substantially more Nigerian crude. Reuters reported this week that it had secured at least 16 million barrels of Nigerian crude for October, equivalent to roughly 520,000 barrels per day, as operations increase. The refinery is also pursuing a multibillion-dollar expansion that could eventually double capacity.
More revealingly, current market economics are already giving domestic refining an advantage. Recent industry data placed Dangote’s gantry price at approximately ₦1,265 per litre, compared with an import-parity price around ₦1,310, making locally refined petrol roughly ₦45–₦46 cheaper per litre than imported supply.
That is precisely what a productive domestic refining industry should ultimately achieve: compete against imports through lower logistics costs, reduced foreign-exchange exposure, scale and efficiency.
The Tinubu administration is also considering reforms to improve crude supply and pricing for domestic refiners. Compliance with domestic crude-supply obligations has reportedly risen substantially, while proposals under consideration include direct crude delivery arrangements and pricing adjustments reflecting avoided freight costs.
The real question therefore becomes unavoidable: if locally refined petrol is already becoming cheaper than imported petrol, why should government recreate an open-ended price subsidy rather than strengthen the conditions making domestic production naturally competitive?
TARGET THE NIGERIAN, NOT EVERY LITRE OF PETROL
Atiku is right about one thing of enormous importance: Nigerians need relief.
Transportation costs remain punishing, logistics feed directly into food prices, and millions of households have absorbed an extraordinary adjustment since subsidy removal.
Where the disagreement arises is over the instrument.
A litre of subsidised petrol does not know whether it enters the tank of an unemployed graduate, a billionaire’s convoy, a commercial bus, an industrial generator or a vehicle carrying it towards an illegal cross-border market.
That was always one of the fundamental defects of generalised fuel subsidy.
If government has scarce resources for relief, there is a stronger argument for directing them towards the citizen or economic activity government actually wants to support: mass transportation, commercial buses, agricultural logistics, vulnerable households and productive enterprises.
Tinubu’s CNG programme follows that philosophy by attempting to reduce the underlying cost of transportation through a cheaper alternative fuel rather than permanently paying part of every petrol bill.
In August, the President directed the rollout of an additional 500 CNG refuelling stations, alongside measures aimed at lowering transport fares.
That approach is not yet sufficient, and implementation must accelerate dramatically. But structurally, reducing the cost of energy is more sustainable than repeatedly subsidising the price of expensive energy.
ATIKU’S BIGGEST CONTRADICTION
Atiku says subsidy removal transferred the burden from government to citizens. There is truth in that observation: households suffered heavily from the immediate price shock.
But the old subsidy did not make the economic cost disappear. Government financed it from public resources that could otherwise support infrastructure, education, healthcare, security or social protection.
The Tinubu administration says resources released from subsidy removal are now being redirected through increased Federation allocations and federal programmes.
In August, government publicly released further details of subsidy savings while acknowledging the sacrifices imposed upon households.
The proper argument is therefore not whether subsidy feels good to consumers. Of course paying less for petrol feels better.
The question is whether Nigeria should again commit public finances to maintaining an administratively determined petrol price when it is simultaneously attempting to build competitive domestic refining, alternative-energy transportation and stronger social protection.
NATIONAL PATRIOTS POSITION
The National Patriots welcomes Atiku’s call for an economic debate and accepts that Nigerians urgently require relief from transportation and energy costs. But a “production-anchored subsidy” cannot be assessed through adjectives.
Atiku must publish its cost, funding source, duration, price formula and beneficiaries. Nigeria should support domestic production and vulnerable citizens without recreating an open-ended fiscal burden under a more attractive name.
Atiku has therefore raised a legitimate policy debate, but he has not yet answered it. If his proposal is genuinely different from the old subsidy, the difference must appear not merely in terminology but in measurable fiscal architecture.
President Tinubu should meanwhile be judged by whether domestic refining expands, CNG becomes genuinely accessible, transportation costs fall and subsidy savings become visible in Nigerians’ lives. That is the accountability required of an incumbent.
Atiku faces a different test. He is asking Nigeria to reconsider a policy instrument that once consumed trillions of naira.
The burden is consequently upon him to demonstrate, before Nigerians vote, precisely how his new version avoids the old dangers.
Calling it “production-anchored” does not make the bill disappear. Calling it “targeted” does not identify the target. Calling it “transparent” does not publish the formula.
If Atiku says the appropriate response is to interrogate the economics, Nigerians should accept his invitation.
And the interrogation should begin with him:
Show us the numbers.
Headlinenews.news Special Investigative Report.
