Atiku's Fuel Subsidy Reversal Plan Faces Harsh Economic Warnings

The Independent Media and Policy Initiative (IMPI) has issued a stern warning that a campaign promise by former Vice President and presidential candidate Atiku Abubakar to reinstate fuel subsidy would severely undermine investor confidence in Nigeria, making the country appear unpredictable and a challenging environment for business. This strong caution was articulated in a policy statement released on August 25, 2026, in Abuja by IMPI's chairman, Dr. Omoniyi Akinsiju, titled “Atiku’s Fuel Subsidy Restoration Campaign Promise Fails Litmus Test of Practicability and Sustainability.” IMPI emphasized that such a move would be a reckless, populist proposal, representing a dangerous step backward and a financial trap that could bankrupt Nigeria, destroy its sovereign credit ratings, and erase recent economic progress.

Atiku Abubakar's proposed Economic Recovery Plan (AERP) outlines a model structured around production rather than consumption, aiming to shift the subsidy from importation to domestic production. This plan, dubbed the ‘Follow-the-Barrel’ model, proposes transferring incentives directly from middlemen traders to local Nigerian refineries. Under this model, eligible public and private local refineries would receive domestic crude allocations at a discounted price, contingent on them passing these exact savings on to consumers. Essentially, it replaces a cash subsidy with a crude oil revenue discount.

However, Dr. Akinsiju described this model as convoluted, arguing that it would force commercial entities such as NNPC Limited or private refineries into complex, politically mandated pricing formulas. He stated that this would directly undermine the noble ideals and provisions of the existing Petroleum Industry Act (PIA) of 2021. Furthermore, IMPI asserted that Atiku’s proposal sends alarming signals to global markets, indicating a lack of regulatory predictability in Nigeria. Such a policy shift, they warned, would deter international capital and halt modern Public-Private Partnerships (PPPs), leading to severe repercussions for funding critical legacy infrastructure projects and a detrimental impact on overall production and productivity.

IMPI also highlighted that from a political economy perspective, Atiku’s policy proposal is fundamentally flawed. It operates on a dual axis: exploiting and weaponizing current social discontent over the rising cost of living, while simultaneously introducing long-term structural risks to Nigeria’s already fragile fiscal framework. Dr. Akinsiju maintained that despite their popular appeal, fuel subsidies are inherently regressive economic tools. Wealthier households, possessing multiple vehicles, consume a disproportionately larger volume of petrol compared to the poorest demographics, who predominantly rely on public transport or lack access to electricity entirely. While a fuel subsidy might create a fiscal illusion, it merely shifts the burden of cost rather than eliminating it.

The think tank elaborated that Atiku’s proposal to re-regulate prices not only directly undermines the PIA 2021 but also creates an illusion of price reduction. Fixed price caps, they explained, eliminate commercial incentives for marketers to distribute fuel to remote areas. Consequently, fuel supplies would inevitably shift to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt, leaving rural areas underserved. Nigeria has a historical record of fiscal morbidity, stemming from successive federal governments deducting subsidy costs