‘Atiku’s Fuel Subsidy Proposal Will Bankrupt Nigeria’

The Independent Media and Policy Initiative (IMPI) has described plans by former Vice President Atiku Abubakar to restore fuel subsidy, if elected President, as a populist proposal that may create more financial and economic problems for Nigeria in the long run.

In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, the think tank noted that although the proposal would initially lead to a reduction in fuel prices, it would ultimately bankrupt the country.

IMPI said: “This reckless, populist proposal represents a dangerous step backwards and a financial trap that would bankrupt Nigeria, destroy the country’s sovereign credit ratings, and wipe out the economic progress made over the past three years.

“Atiku’s proposal to re-regulate prices not only directly undermines the Petroleum Industry Act (PIA) 2021, but also creates an illusion of price reduction.

“Fixed price caps remove commercial incentives for marketers to distribute fuel to remote areas; consequently, fuel supplies would shift to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt.”

According to him, besides forcing commercial entities like NNPC Limited or private refineries into complex, politically mandated pricing formulas, Atiku’s proposal also sends signals to global markets that Nigeria lacks regulatory predictability.

“This policy shift would scare away international capital and freeze modern Public-Private Partnerships (PPPs), with repercussions for funding critical legacy infrastructure projects and a damning effect on production and productivity.

“We reiterate that Nigeria’s historical infrastructure deficit cannot be solved by returning to the fiscal policies that created it. Atiku Abubakar’s ‘Follow-the-Barrel’ model replaces a cash subsidy with a crude oil revenue discount,” he added.

IMPI also outlined how the Atiku plan would put the country’s sovereign credit status at risk after a relatively stable period of growth under the President Bola Tinubu administration.

“We highlight more significant threats to the country’s economic well-being by projecting international rating agencies’ likely responses to Atiku’s declaration to restore the fuel subsidy.

“We note that while a capped budget framework limits open-ended liabilities, international rating agencies like Fitch and S&P focus heavily on structural policy reversals.”