Subsidy: Atiku is desperate for power – Presidency

The Presidency has criticised former Vice President Atiku Abubakar for his new stance on subsidy removal, accusing the African Democratic Congress (ADC) Presidential candidate of exhibiting desperation for power.

Bayo Onanuga, Special Adviser to the President on Information and Strategy, in a statement said Atiku lacks comprehension of the present economic dynamics for suggesting that he would “restore the much-abused, wasteful, pillaged, corruption-ridden fuel subsidy regime, which the Petroleum Industry Act made illegal from the end of June, 2023.”

The Presidency said even though Atiku used to believe that the subsidy regime must be eliminated, a point he canvassed in the run-up to the 2023 election, he has “now opportunistically recanted the major plank of his economic doctrine and turned a renegade.

• Flood destroys homes, fish ponds, farms in Niger
• The Only Married Man I Have Dated Is MC Oluomo – Ehi Ogbebor

“It is not difficult to explain why Atiku has latched onto the abandoned subsidy regime, five months to the election. Desperate for power, he needed to make a promise that he knew, if he were candid with our people, does not make fiscal sense, is retrogressive, and is against the genuine interest of the people.

“But before his suggestion hoodwinks the people, we must quickly subject the promise to a serious examination, especially in the context of Nigeria’s present economic and petroleum realities.”

The Presidency said while they respect Atiku’s constitutional right to propose alternative policies, to seek the support of Nigerians and recant a major policy prescription. However, Nigerians also deserve to understand what the proposed restoration of subsidy would actually mean, how it would be funded, and whether it is compatible with the legal and structural changes that have taken place in the petroleum sector.”

Onanuga said subsidy is not money sitting in the treasury to be disbursed to offer cheap fuel to Nigerians.

“It is the massive discount the NNPC offered the Nigerian government: selling fuel it bought at N100 at N50 at the pump, leading to under-recovery of costs and massive losses.

“Somewhere in the NNPC books are still trillions of Naira in subsidy costs that the Nigerian government has not paid. Contrary to Atiku’s claim in his interview, no N30 trillion subsidy windfall or savings exists anywhere except in his imagination.

“The petrol subsidy regime that Nigerians knew before May 2023 was dismantled as part of the country’s petroleum-sector reforms. The Petroleum Industry Act established a new framework for the downstream petroleum market. It removed the subsidy, as was previously done for diesel, kerosene and aviation fuel, ending a system that had placed a substantial and often unpredictable burden on public finances.”

The PIA, the statement said scheduled the subsidy removal by the end of June 2023, adding that President Tinubu only accelerated it by weeks to stop further bleeding before the due date.

Onanuga said restoring the old arrangement therefore cannot simply be presented as a matter of announcing that government will once again pay part of the cost of petrol.

“It would require a clear legal, fiscal and administrative framework, including identifying the source of the funds and determining how such a policy would be implemented under the present petroleum-market structure.

“More importantly, Nigeria’s petroleum landscape has changed significantly since May 2023. For many years, the country relied heavily on imported petrol, with the government bearing the consequences of the gap between the regulated pump price and the cost of supplying the product.

“Today, the emergence of substantial domestic refining capacity has fundamentally altered that equation. The Dangote Refinery has become a major source of locally refined petrol. Indeed, the Dangote Refinery would not have kickstarted production for local consumption were the subsidy regime operative. This is an important point that Atiku deceptively ignored.”

The statement further argued that Atiku’s proposal portends a reversal of current local production, and it will spell bankruptcy for smaller local refineries like Aradel’s, causing attendant job losses and a loss of foreign exchange.

The Presidency said the Petroleum sector is now market-driven, because Nigeria now exports refined products to Europe, Asia, and the United States, restoring national pride, adding that the “development is a sharp contrast to when Obasanjo and Atiku were in power:”

Part of the statement said the subsidy debate must be grounded in the realities of today’s market rather than treated as though Nigeria’s petroleum sector has remained unchanged.

“In practical terms, therefore, Nigerians should ask a straightforward question: If the subsidy is restored, who pays for it? What will the new pump price be? N200 or N500? If petrol is sold below its economic cost, which is about N1,200 to N1,300, someone must absorb the difference.

“There is no disagreement that the cost of petrol places enormous pressure on Nigerian households and businesses. The hardship created by higher energy and transportation costs is real, and government will continue to pursue policies that reduce the burden on citizens.

“Political promises must be backed by fiscal arithmetic. Alhaji Atiku Abubakar is entitled to propose a different economic direction. Specific answers should accompany any promise to restore fuel subsidy.”