Atiku’s Fuel Subsidy Promise: A Long March to Enrich Friends?

Atiku Abubakar, the presidential candidate, once stated during his 2019 campaign that he would not enrich his family members but his friends, and that there was nothing wrong with his friends becoming richer as long as corruption was not involved. This statement highlights the concept of crony capitalism, where those closest to wealth and power gain more through state policies.

Recently, Atiku has again spoken about fuel subsidies, this time favoring a limited subsidy connected with domestic refining rather than reinstating the entire old imported petrol subsidy regime. However, the main question remains: why should petrol consumption be the primary means of transferring public resources to Nigerians? Universal petrol subsidy can be considered welfare for the wealthy, as it benefits those who consume more fuel, which is often the wealthy.

Poor Nigerians, who may rely on walking, small generators, or public transportation, do not receive direct subsidies unless they purchase fuel. The subsidy follows consumption, and those who consume more fuel benefit more, creating a significant distributional problem. With only about 10% of Nigerian households owning a car or truck, the poor farmer or household in rural areas does not receive direct benefits from subsidizing petrol they never bought.

Wealthy Nigerians, on the other hand, often own multiple petrol-consuming assets such as cars, generators, and businesses, meaning they receive a larger direct benefit from the subsidy. The administration that took office in May 2023 had to address the issues of petrol subsidy and the subsidised exchange rate system that allowed certain privileged individuals to obtain dollars at better rates than the general public.

The consequences of changing these policies became intertwined, making it misleading to attribute the entire increase in petrol prices solely to the removal of PMS subsidy.