Petrol subsidy: APC campaign council warns of smuggling, revenue losses

The All Progressives Congress Presidential Campaign Council has condemned former Vice-President Atiku Abubakar's proposal for a production subsidy on locally refined petrol, warning that the policy could reignite fuel smuggling and exacerbate Nigeria's fiscal challenges. In a press conference, APC-PCC spokesman Dele Alake stated that Atiku had yet to address critical questions regarding the legal framework, cost, and funding mechanism for the proposed subsidy.

Atiku reiterated his support for the measure on Friday, claiming it would help lower pump prices. The APC-PCC argued that the proposal could undermine the deregulated petroleum sector and impose additional financial burdens on the Federal Government, as any discount on crude supplied to refiners would reduce revenue accruing to the federation.

They cited Section 205(1) of the Petroleum Industry Act 2021, which mandates unrestricted free-market conditions to determine petroleum product pricing. The council also referred to the Nigerian Midstream and Downstream Petroleum Regulatory Authority's statement, which stated that it does not fix pump prices or issue administrative price templates unless statutory conditions for intervention are met.

Alake urged Atiku to explain if refineries benefiting from the proposed subsidy would be compelled to sell petrol at a fixed price and, if so, how the government would enforce this price condition in line with the Petroleum Industry Act. He also questioned how Atiku's plan would guarantee lower prices at filling stations if refiners received preferential treatment.

The APC-PCC estimated that the proposed subsidy could cost between N17tn and N21tn annually, depending on factors like the discount size, volume covered, and the extent of support applied to domestically sold petrol. They stressed that the assumptions behind this estimate needed to be clearly defined. The council also noted that Atiku's latest proposal contradicts his earlier stance on deregulation of the downstream petroleum sector, which he previously described as fraudulent and pledged to remove.