Atiku unveils new Subsidy Model

Former Vice President Atiku Abubakar has revealed his plan for reforming Nigeria's petroleum subsidy system. If elected, Atiku intends to replace the current import-based subsidy with a targeted, capped, transparent and independently audited production subsidy. This new system aims to reduce energy costs and stimulate domestic refining.

In a statement by his Senior Special Assistant on Public Communication, Phrank Shaibu, Atiku explained that his Atiku Economic Recovery Plan (AERP) 2027 proposes a shift from import subsidies to production subsidies, moving from middlemen to Nigerian refineries, and transitioning from unverifiable claims to verifiable barrels. The key principle is that the subsidy will follow the barrel.

Under the proposed plan, qualifying refineries would receive domestic crude at a preferential price, provided they meet strict production, efficiency, transparency and domestic-supply conditions. Atiku acknowledged that selling crude below market value comes with an opportunity cost for the government, which his plan would address openly.

The plan also ensures that refineries do not profit without passing the benefits to consumers by requiring proportional volumes of petroleum products to be supplied to the market. No subsidies will be granted without corresponding product deliveries.

Atiku emphasized the need to prevent any favoritism or diversion of subsidized resources. Allocation would be based on verified capacity, efficiency, domestic supply, and compliance, rather than political discretion. The programme includes safeguards against arbitrage, with any diversion resulting in loss of eligibility, refund of subsidies, and regulatory/legal sanctions.

The subsidy scheme would have a sunset clause and periodic reviews as domestic refining capacity grows, efficiency improves, competition increases, and production costs decline. Support per barrel would progressively reduce based on predetermined benchmarks, with the ultimate goal of building a self-sustaining refining industry.

Atiku stressed that the proposal offers a transparent alternative to President Tinubu's abrupt subsidy removal, which led to soaring petrol and diesel prices, increased transportation costs, and soaring food prices.