The All Progressives Congress Presidential Campaign Council (APC-PCC) has challenged former Vice-President Atiku Abubakar to clarify the legal, fiscal, and operational framework of his proposed production subsidy for locally refined petrol. Atiku, the presidential candidate of the ADC in the 2027 presidential election, reiterated his proposal at a press conference in Abuja on Friday, saying a production subsidy for locally refined petrol would reduce pump prices.
The APC-PCC, in a press statement issued on Sunday by its spokesperson, Dele Alake, expressed concerns about the compatibility of Atiku's proposal with the Petroleum Industry Act (PIA) 2021. The council cited Section 205(1) of the PIA, which provides for wholesale and retail petroleum prices to be determined by unrestricted free-market conditions.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) stated on Saturday that it does not fix pump prices or issue administrative price templates except when statutory conditions for intervention are met. The regulator noted that no such market failure had been declared. The APC-PCC asked Atiku to clarify whether refineries receiving the proposed subsidy would be required to sell petrol at a government-prescribed price.
The council also questioned the fiscal implications of Atiku's proposal, warning that preferentially priced crude oil for domestic refineries could reduce revenue accruing to the Federation. The APC-PCC estimated that the proposed intervention could cost between N17 trillion and N21 trillion annually, depending on the size of the discount, the volume covered, and whether the subsidy applied to the entire barrel of crude oil or only to petrol sold domestically.
The APC-PCC asked Atiku to disclose the proposed subsidy rate, annual spending ceiling, volume of crude oil or petrol to be covered, funding source, and safeguards against diversion, smuggling, and fraudulent claims. The council also asked him to explain the mechanism for guaranteeing lower pump prices and whether implementing the proposal would require amendments to the PIA.
The APC-PCC questioned the consistency of Atiku's latest proposal with his previous support for downstream deregulation. In November 2022, Atiku described the petrol subsidy system as fraudulent and pledged to complete its removal. However, the council noted that Atiku now supports restoring the subsidy in another form and challenged him to explain how his proposal would avoid the abuse, scarcity, smuggling, and fiscal losses associated with the previous system.
The Tinubu administration has focused on expanding the use of compressed natural gas (CNG) and electric mass transit to reduce transportation costs. The government has converted more than 120,000 vehicles to CNG, with thousands more converted privately, while working with state governments to expand the programme. According to the APC-PCC, commuters in seven states and the Federal Capital Territory are already paying between 31 and 83 per cent less on routes served by CNG and electric buses.
Key points
- The APC-PCC challenges Atiku Abubakar to clarify the legal, fiscal, and operational framework of his proposed production subsidy for locally refined petrol.
- Atiku's proposal raises questions about its compatibility with the Petroleum Industry Act (PIA) 2021 and its cost to the government.
- The Tinubu administration has focused on expanding the use of compressed natural gas (CNG) and electric mass transit to reduce transportation costs.
