Atiku’s Subsidy Policy Is Confused, Costly,Unworkable — Presidency

The Presidency has described former Vice-President Atiku Abubakar’s position on petrol subsidy as confused and incoherent, accusing him of playing politics with the economic challenges facing Nigerians.

The Presidency, in a statement issued on Wednesday, said Atiku’s comments on petrol subsidy had produced three different explanations within one week, raising questions about the consistency and viability of his proposed policy.

It said the confusion began when Atiku’s spokesperson, Paul Ibe, stated that the former vice-president would restore petrol subsidy if elected president and later phase it out.

According to the Presidency, Ibe described the proposed subsidy as a temporary intervention designed to provide Nigerians and businesses with room to recover.

However, it said another senior aide to Atiku, Phrank Shaibu, subsequently described Ibe’s statement as an “unauthorised and misleading characterisation” of Atiku’s position.

The Presidency said Shaibu instead explained that Atiku would not set a predetermined date for ending the subsidy, but would retain it until domestic refining expands, supply stabilises, competition deepens and the market could deliver affordable prices without government support.

“But just hours later, Atiku himself intervened and effectively overruled that clarification,” the statement said.

It noted that Atiku subsequently insisted that his position “has not changed” and reaffirmed that he would restore what he described as a “targeted subsidy” if elected president.

The former vice-president had also said: “I will restore targeted subsidy and put purchasing power back in the hands of Nigerians.”

The Presidency said the conflicting statements were not merely a matter of semantics but represented a serious policy contradiction.

“If Atiku’s position has not changed, why did one of his principal aides say the subsidy would be temporary and phased out? Why did another senior aide have to publicly disown that explanation and introduce a completely different framework based on market conditions? And why did Atiku then step in to reaffirm the original position?” it asked.

The Presidency said Nigerians deserved clarity rather than what it described as “policy by trial and error.”

It also challenged Atiku’s argument that restoring petrol subsidy would automatically address the cost-of-living crisis, saying several factors determine petrol prices and food inflation.

“Petrol does not become cheap simply because government orders a subsidy or because competition is expected to emerge,” it said.

According to the Presidency, international crude oil prices, exchange rates, refining costs, transportation, distribution and other market costs all influence pump prices.

It acknowledged that competition could improve efficiency and margins but argued that it could not shield Nigeria completely from global crude oil prices and other input costs.

The Presidency also faulted what it described as an oversimplification of the relationship between petrol prices and food inflation.

It said while energy and transportation costs affect food prices, petrol prices alone had never been responsible for food inflation in Nigeria.

It listed agricultural productivity, insecurity, exchange rates, logistics, storage, flooding, input costs, money supply and supply constraints among other factors affecting food prices.

“A serious economic programme must address these factors, as President Bola Ahmed Tinubu has been doing for the past three years, rather than reduce the entire cost-of-living crisis to petrol prices,” the Presidency said.

It consequently challenged Atiku to provide details of his proposed “targeted subsidy,” including its cost, beneficiaries, funding mechanism and conditions for its eventual termination.

“We therefore urge Atiku to stop shifting positions and explain precisely what he means by ‘targeted subsidy’: how much will it cost, who will benefit, how will beneficiaries be identified, how will it be funded, and what objective economic conditions will determine its eventual termination?” it asked.

The Presidency warned that Nigerians could not afford another opaque and potentially costly subsidy regime presented under a new name.

It argued that Atiku should either present what it described as a coherent, costed and workable petroleum policy or acknowledge that his proposal amounted to political posturing over a reform that had strengthened government finances.

“The economy is too serious for policy somersaults, incoherence, destructive populism and election gimmicks,” the statement said.

The Presidency also questioned Atiku’s proposal to link subsidy to the price of crude oil, pointing to the different products obtained from a barrel of crude after refining.

It said petrol accounts for only about 45 per cent of the products from a refined barrel of crude, while the remaining output includes diesel, aviation fuel, kerosene and other petroleum products.

The statement noted that diesel, which it said was deregulated during the Obasanjo-Atiku administration in 2004, accounts for roughly 25 per cent of a barrel.

It added that jet fuel and kerosene account for about nine per cent, while kerosene and jet fuel were deregulated in 2009, with subsidies removed in 2016.

According to the Presidency, about 10 to 15 per cent of a barrel produces base ingredients used in synthetic rubber, nylon, polyester and plastics, while asphalt accounts for about two to four per cent.

It further said Hydrocarbon Gas Liquids, including propane and butane, account for about four per cent, while lubricants and waxes constitute about one to two per cent.

The Presidency therefore questioned whether Atiku would subsidise the other products derived from crude oil if his proposal was based on the price of a barrel.

“Will Atiku subsidise all these by-products of the barrel as well, since kerosene is used by the underprivileged to cook, and many homes and factories use diesel to power generators and delivery trucks?” it asked.

It also questioned whether refineries supplied with discounted crude would be allowed to profit from the other 55 per cent of refinery output while government support focused primarily on petrol.

The Presidency concluded by accusing Atiku of lacking sufficient understanding of the petroleum market and his proposed subsidy framework.

It urged the former vice-president to provide Nigerians with a clear, costed and sustainable policy rather than what it described as shifting positions and political rhetoric.