The Independent Media and Policy Initiative (IMPI) has warned that former Vice-President Atiku Abubakar’s proposed production subsidy for petrol could put pressure on public finances and discourage investment in Nigeria’s oil and gas sector, defending the Federal Government’s 30-day fuel price discount as a market-driven intervention.
The policy think tank said the measure introduced by the administration of President Bola Tinubu was fundamentally different from a subsidy because the Nigerian National Petroleum Company Limited was foregoing commercial retail profit margins to provide temporary relief to motorists.
In a policy statement signed by its chairman, Omoniyi Akinsiju, the group argued that the intervention was designed to cushion the impact of the Middle East conflict on global fuel prices without imposing additional direct payment obligations on the national treasury.
“The policy is an agile, data-driven intervention designed to act as a shock absorber against a severe global price spike, rather than a return to a broken subsidy system,” IMPI said.
Atiku had criticised the 30-day discount as a “panic-driven stunt”, questioning whether a temporary intervention could address structural inflation or benefit motorists who buy petrol outside NNPCL retail outlets.
However, IMPI said the 30-day period was intended as a controlled trial to assess market movements, inflationary pressures and supply-chain leakages before the government decided whether to adjust or extend the measure.
It added that the arrangement would allow authorities to review maximum gantry prices in response to changing market conditions.
The group explained that the key difference between the two policies was their funding structure. Under the NNPCL arrangement, the company would sacrifice commercial margins to sell petrol at landing cost, while Atiku’s proposal would require the government to pay refinery owners the difference between production costs and an agreed domestic price.
According to IMPI, the proposed N1,350-per-litre ceiling on petrol’s ex-gantry or landing cost should also be regarded as a price-smoothing mechanism rather than rigid price control.
It said the ceiling would be determined through an economic formula and reviewed at the end of each 30-day period.
The think tank maintained that the Tinubu administration’s approach relied on market-linked forward pricing, with crude oil transactions tied to international benchmarks but converted at agreed naira rates or negotiated landing-cost targets.
It warned that Atiku’s proposed model could undermine government revenue if crude oil were supplied below its economic value, thereby imposing opportunity costs on the Federation Account.
IMPI also raised concerns about the possible effect on international oil companies and private joint-venture partners, arguing that compulsory discounts on their crude could trigger contractual disputes and create uncertainty for investors.
The group warned that forcing oil companies to sell crude at government-mandated discounts could lead to costly international arbitration and discourage fresh investment in the sector.
It argued that international operators might redirect exploration funds to countries with more predictable investment environments, potentially slowing oil production and the development of new projects in Nigeria.
IMPI linked the country’s previous difficulty in securing final investment decisions for oil and gas projects to an unfavourable investment climate, adding that the Tinubu administration had begun to reverse that trend.
The group maintained that the temporary petrol discount offered a way to cushion consumers against global price shocks while avoiding the direct fiscal commitments and potential investment risks it associated with Atiku’s proposal.
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