The Independent Media and Policy Initiative (IMPI) has cautioned that reintroducing fuel subsidy in Nigeria could have disastrous consequences for the country's economy. According to IMPI Chairman, Dr Omoniyi Akinsiju, such a move would threaten fiscal stability, investor confidence, and the country's long-term energy reforms. IMPI's warning comes as presidential candidates Alhaji Atiku Abubakar and Mr Peter Obi propose subsidy restoration policies.
IMPI has challenged Atiku and Obi to publicly explain how their proposed subsidy restoration policies would be funded and implemented without worsening the country's fiscal challenges. The policy group demands clear, mathematically sound, and empirically backed roadmaps for their respective proposals. Akinsiju emphasized that political campaign promises should be anchored on sound policy logic rather than economic illusions designed for temporary electoral appeal.
Akinsiju questioned how any administration would compel International Oil Companies (IOCs) and private crude producers to sell crude to domestic refiners at government-mandated discounted prices. He noted that such an arrangement could raise questions around existing contracts, international arbitration, and investor confidence in Nigeria's oil industry. Furthermore, Akinsiju demanded an explanation of how the Federal Government would absorb potential revenue losses from discounted crude sales.
The Federation Account Allocation Committee (FAAC) relies heavily on oil revenues, and Akinsiju asked how a 'crude discount' or 'production subsidy' would affect monthly revenue shortfalls to states and local governments. He also challenged the candidates to explain how their proposals would prevent subsidized crude or refined petroleum products from being diverted across Nigeria's borders for profit, particularly in a deregulated regional market.
Akinsiju further questioned how a return to price controls or crude price differentials would be reconciled with the Petroleum Industry Act (PIA) 2021 and its market-oriented framework for the downstream sector. He demanded transparency on how any subsidy arrangement would be funded, asking if it would be explicitly captured in the national budget or if it would revert to off-budget, unappropriated under-recovery deductions by NNPC Limited.
IMPI's warning comes as Nigerians face increasing poverty and economic challenges. The policy group emphasized that subsidy proposals should not be presented merely as attractive campaign promises without credible financing and implementation plans. Akinsiju warned that returning to subsidy could reverse fiscal gains, weaken international credit standing, and undermine efforts to achieve energy independence through domestic refining and local currency crude transactions.
IMPI has called on Atiku and Obi to present a step-by-step, empirically-backed implementation roadmap that addresses fundamental questions before the Nigerian public. The policy group insists that Nigerians deserve complete policy clarity before the 2027 elections.
Key points
- IMPI warns that reintroducing fuel subsidy could threaten Nigeria's fiscal stability and investor confidence.
- The policy group challenges Atiku and Obi to provide clear roadmaps for their subsidy restoration policies.
- IMPI demands transparency on how any subsidy arrangement would be funded and implemented.
