…As Onanuga questions cost, legality of proposed return to petrol subsidy
By Firdaus Jibril
The Federal Government has criticised former Vice President Atiku Abubakar’s proposal to restore petrol subsidy if elected president, describing the policy as a return to an expensive and unsustainable system.
The government’s position was contained in a statement issued on Thursday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga.
Onanuga said Atiku was entitled to propose alternative economic policies, but Nigerians deserved to know how a renewed petrol subsidy would be financed and implemented under the current petroleum-sector framework.
He said the subsidy regime that operated before 2023 placed a substantial burden on government finances, as the state was required to absorb the difference between the cost of supplying petrol and the regulated pump price.
According to him, the Petroleum Industry Act (PIA) provided for the removal of petrol subsidy by the end of June 2023, while President Bola Tinubu’s administration accelerated the process.
The government said restoring the former arrangement would consequently require a new legal, fiscal and administrative framework, including a clear source of funding for the subsidy.
Onanuga also said Nigeria’s petroleum industry had undergone significant changes since the removal of the subsidy, particularly through the expansion of domestic refining capacity.
He cited the Dangote Refinery and other local refineries as evidence of the country’s shift towards domestic production of refined petroleum products.
The government said Nigeria was increasingly moving away from dependence on imported petrol towards domestic refining, arguing that the transition could help conserve foreign exchange, strengthen energy security and support industrial development.
Onanuga questioned how a renewed subsidy would operate within the current market structure, asking whether the government would subsidise local production, transportation and distribution, or another segment of the petroleum value chain.
He also questioned the projected cost of the proposed programme and whether the government would have to borrow to finance it.
“Political promises must be backed by fiscal arithmetic,” Onanuga said, calling on Atiku to provide details of the proposed subsidy programme, including its annual cost, funding source and legal implications.
The government further maintained that subsidy payments had previously generated significant financial pressures, including obligations involving petroleum suppliers and public-sector financing arrangements.
It said funds previously committed to subsidised petrol could instead be channelled into infrastructure, social services and allocations to the three tiers of government.
The statement cited July federation revenue distributions of about N3 trillion as an example of what the government described as improved fiscal capacity following the removal of petrol price distortions and changes to the foreign exchange regime.
The Federal Government acknowledged that higher petrol and transportation costs had increased pressure on households and businesses, but maintained that sustainable measures should be pursued rather than returning to the previous subsidy structure.
It pointed to the government’s promotion of compressed natural gas as one alternative, noting that CNG could be significantly cheaper than petrol for vehicles and commercial transportation.
The government called on political actors to frame the subsidy debate around Nigeria’s current petroleum market and economic realities, rather than the conditions that prevailed before the 2023 reforms.
It also called on Atiku to present Nigerians with the full fiscal and legal implications of his proposal to restore petrol subsidy