…ADC Candidate Dumps Import Subsidy for Capped Production Support, Says ‘Subsidy Will Follow the Barrel’
…Refineries to Get Preferential Crude Only If Savings Are Passed to Consumers
…Promises to Track Every Barrel, Audit Every Naira, Punish Diversion
…Plan Has Sunset Clause, Subsidy to Shrink as Local Refining Expands
…Challenges Tinubu Over NNPCL’s ₦11.97trn ‘Energy Security Expenses’, Demands Reconciliation of ₦30trn Federation Funds
By Jeremy Fregene
Former Vice President and African Democratic Congress (ADC) presidential candidate, Atiku Abubakar, has provided the first detailed architecture of his controversial plan to reintroduce petroleum subsidy if elected President in 2027, proposing to give Nigerian refineries crude oil at preferential prices in exchange for cheaper petroleum products for consumers.
Under the plan, subsidy would no longer be paid on imported petrol or through marketers and middlemen, but would be transferred directly to domestic production, with every barrel of discounted crude tracked from allocation to refining and eventual supply to the Nigerian market.
The proposed intervention would also be capped annually by the National Assembly, independently audited, and progressively reduced as Nigeria’s refining capacity and competition improve, according to details of the Atiku Economic Recovery Plan (AERP) 2027 released on Thursday by his Senior Special Assistant on Public Communication, Phrank Shaibu.
Atiku’s detailed proposal came amid a fierce political controversy over his declaration that he would restore fuel subsidy if elected, a pledge that drew sharp attacks from President Bola Tinubu, the Presidency, and Federal Capital Territory Minister, Nyesom Wike.
Tinubu had described Atiku’s position as evidence of “serious ignorance of governance and the economy,” while presidential spokesman Bayo Onanuga accused the former Vice President of desperation and attempting to drag Nigeria back to a fiscally ruinous policy he himself promised to abolish during the 2023 presidential campaign.
But Atiku’s camp said on Thursday that the proposal had been misrepresented as a return to the old subsidy regime.
According to the ADC presidential candidate, his plan is fundamentally different from the former import-dependent subsidy system, under which the government paid the difference between the landing cost of imported petrol and the regulated pump price.
“My proposal is not to resurrect the old subsidy regime. We will move subsidy from importation to production, from middlemen to Nigerian refineries, and from unverifiable claims to verifiable barrels,” Atiku said.
“The principle is simple: the subsidy will follow the barrel.”
Under the AERP, qualifying public and privately owned Nigerian refineries would receive domestic crude oil at preferential prices, but only after meeting strict conditions covering production capacity, operational efficiency, transparency, and supply to the domestic market.
The scheme would therefore effectively use discounted Nigerian crude as a temporary production incentive, with the government absorbing the opportunity cost between the preferential price supplied to refineries and its market-equivalent value.
Atiku acknowledged that such an arrangement would impose a genuine cost on the Federation but said, unlike previous subsidy arrangements, the liability would be explicitly calculated, budgeted, and disclosed.
“The cost will be known. The ceiling will be known. The beneficiaries will be known. And, most importantly, the benefit delivered to Nigerians will be measurable,” he said.
“We will determine what Nigeria can afford before we subsidise. We will not subsidise first and discover the bill afterwards.”
A central provision of the plan is intended to prevent refinery operators from obtaining cheap Nigerian crude and retaining the financial benefit without reducing the prices consumers pay.
According to Atiku, no refinery would qualify for preferential crude unless it supplied a corresponding, independently verified quantity of refined petroleum products to the domestic market under a transparent pricing formula reflecting the discount received on the crude.
Crude allocations, refinery intake, production yields, inventories, and domestic product deliveries would consequently be reconciled, creating what the campaign said would be an auditable chain capable of tracing every subsidised barrel from the point of allocation to the Nigerian market.
“No phantom cargoes. No fictitious imports. No unverifiable under-recoveries. No retrospective claims,” Atiku said.
“If you receive subsidised Nigerian crude, you must refine it in Nigeria, supply the agreed products to Nigerians, and pass the benefit to Nigerians. Otherwise, you do not qualify.”
The ADC candidate also said access to the programme would be open to all qualifying public and private refineries under uniform rules, rather than allocated through presidential or political discretion.
Allocation would be determined by independently verified refining capacity, efficiency, domestic supply commitments, and compliance.
The proposal also seeks to tackle one of the biggest potential vulnerabilities in a discounted-crude arrangement — arbitrage.
Under the plan, refineries receiving preferential crude would be prevented from diverting either the crude or products benefiting from the subsidy to more profitable export markets while Nigerian taxpayers absorb the cost.
Any operator found to have diverted subsidised crude or products, falsified production records, violated domestic supply requirements, or failed to pass the prescribed financial benefit to consumers would lose eligibility.
The company would also be required to refund the subsidy benefit and could face regulatory and legal sanctions.
“Nigeria will not subsidise anybody’s private profit. Public support must produce a measurable public benefit,” Atiku said.
Another significant departure from the previous subsidy regime, according to the proposal, would be the imposition of a predetermined annual fiscal ceiling.
Rather than allowing subsidy liabilities to accumulate before the government determined their eventual cost, the maximum amount available for the intervention would be appropriated in the federal budget and subjected to National Assembly scrutiny.
“No refinery gets unlimited support. No marketer brings the government a surprise bill. No agency manufactures an under-recovery after the transaction,” Atiku said.
“The National Assembly will see the appropriation. Nigerians will know the maximum exposure. Independent auditors will see the barrels. And the public will see what was produced for every naira of support.”
Where oil revenues exceed the benchmark contained in the federal budget, the proposal provides that a predetermined and legally appropriated proportion of the additional revenue could be deployed to the programme, but only within the established subsidy ceiling.
The plan says anticipated oil windfalls would not be counted before they materialise, while weaker oil prices or lower production would not constitute grounds for exceeding the predetermined limit.
Atiku also pledged to disclose the opportunity cost of providing preferential crude and its implications for revenues accruing to the federal, state and local governments rather than financing the intervention through opaque deductions from the Federation Account.
Crucially, the former Vice President said his proposed subsidy was designed eventually to eliminate itself.
The AERP would include statutory sunset and periodic review provisions, with support per barrel progressively reduced as domestic refining capacity expands, refinery utilisation improves, competition strengthens and production costs decline.
“Our objective is not permanent subsidy. It is to use temporary and disciplined support to build a refining industry strong enough eventually not to need subsidy,” Atiku said.
“We will measure the fiscal cost against refinery output, domestic prices, jobs, investment and benefits delivered to consumers. If the policy is not delivering value greater than its cost, it must be adjusted or terminated.”
The former Vice President argued that the economic benefits would extend beyond petrol stations, saying cheaper petrol and diesel should reduce transportation, agricultural, manufacturing and logistics costs.
Lower transport costs, he argued, would provide relief to commuters and farmers, while cheaper energy and logistics would lower production costs for manufacturers and traders and ultimately help moderate inflation.
“The ultimate objective is not merely cheaper petrol. It is cheaper transportation, cheaper food, stronger businesses, more Nigerian jobs and greater purchasing power,” he said.
“Nigeria’s crude should first help build Nigerian refining capacity and Nigerian prosperity.”
Atiku also used the unveiling of his alternative subsidy architecture to escalate his challenge to Tinubu over what exactly happened after the President declared during his May 29, 2023 inauguration that “subsidy is gone.”
He said Nigerians immediately absorbed sharply higher petrol prices, transportation costs and food prices on the understanding that eliminating subsidy would free enormous resources for government.
But Atiku argued that subsequent government accounts raised questions about whether all subsidy-like petroleum costs had actually disappeared.
He cited NNPCL’s audited financial statements, which he said recorded approximately ₦4.84 trillion in “Energy Security Expenses” in 2023 and another ₦7.13 trillion in 2024 — a combined ₦11.97 trillion.
Atiku demanded a detailed explanation of the economic substance of those expenses and whether any portion represented under-recoveries, pricing differentials or other petroleum supply costs that effectively performed a subsidy function.
“We are not interested in playing games with accounting terminology,” he said.
“If government continued absorbing differences between the economic cost of petroleum products and what was recovered from the market, then Nigerians are entitled to ask how that differs economically from the subsidy they were told had disappeared.
“You cannot abolish subsidy at Eagle Square and allow subsidy-like costs to resurface in government accounts without explaining the contradiction.”
Atiku said Nigerians should not be required to pay market-level petrol prices on the basis that subsidy had ended while petroleum-related costs were simultaneously being borne by Federation resources without sufficient public explanation.
“Nigerians cannot pay for subsidy removal twice — through punishing pump prices and through unexplained subsidy-like costs against their commonwealth,” he said.
The ADC presidential candidate also clarified his controversial claim concerning approximately ₦30 trillion in government funds, after the Presidency dismissed the figure as an imaginary “subsidy windfall.”
Atiku said he had not claimed that ₦30 trillion constituted fuel subsidy savings or that the entire amount had been stolen.
Rather, he said his team’s reconciliation of published Federation Account figures had identified approximately ₦30 trillion across revenues, deductions, savings, transfers and related classifications that required a detailed public reconciliation.
“Let nobody misrepresent the argument. We are not saying ₦30 trillion is fuel subsidy or that ₦30 trillion has been proven stolen,” Atiku said.
“We are saying that approximately ₦30 trillion reflected across Federation revenues, deductions, savings, transfers and related classifications requires a complete, month-by-month public reconciliation.
“The distinction is important — but so is the question.”
He consequently challenged Tinubu to answer what he described as two separate questions: what became of the fiscal gains from subsidy removal and what precisely accounted for subsequent petroleum-related expenditure; and how the approximately ₦30 trillion identified by his campaign across Federation revenue classifications should be reconciled.
“These are government figures. The accounts are in government’s custody. The burden cannot be transferred to Nigerians or the opposition,” Atiku said.
“Publish every deduction. Identify every beneficiary. Show every transfer. Show every balance. Show the legal authority.
“If the money is properly accounted for, open the books and end the argument.”
Atiku also promised that an administration led by him would subject previous subsidy transactions to lawful scrutiny, with anyone found through due process to have fraudulently obtained or diverted public funds facing prosecution and asset recovery.
“Anyone who stole subsidy money should prepare to return it. But we will not replace one opaque system with another,” he said.
The detailed proposal appears designed to answer some of the most immediate questions raised by the Presidency after Atiku’s initial pledge, particularly how the subsidy would be funded, what exactly would be subsidised, how its fiscal cost would be controlled and how government would prevent a return of the corruption associated with the old import-based system.
Atiku said the dividing line between his proposal and Tinubu’s reform was therefore not simply subsidy versus no subsidy, but the manner in which government intervention was structured and whether its benefits could be traced directly to consumers.
“Tinubu’s approach was: announce first, impose the pain immediately, and explain the accounts later,” he said.
“Ours will be: define the intervention, establish the ceiling, appropriate the money, track the crude, verify the production, guarantee the consumer benefit, publish the accounts and progressively reduce the subsidy.”
He summed up the proposal in seven steps that could now form a major plank of his 2027 economic campaign: “Target it. Cap it. Budget it. Track it. Audit it. Make Nigerians feel the benefit. Reduce it as domestic production grows. And ultimately, end the need for it altogether.”
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