– Say the vulnerable have been left on their own
– Dismiss claim that ex VP is proposing old consumption subsidy
Peter Uzoho
A growing number of economic and energy analysts have continued backing former Vice President Atiku Abubakar’s proposal for a refinery-linked subsidy model while slamming the Bola Tinubu administration for failing to cushion the impact of subsidy removal on Nigerians.
Their position comes after Atiku, presidential candidate of the African Democratic Congress (ADC), pledged last week to restore subsidy if elected in 2027, citing lack of transparency on how savings have been spent.
The presidency has since dismissed the plan as “ignorant” and “retrogressive.”
Speaking to THISDAY on the debate, Professor of Economics at the University of Ibadan, Prof. Adeola Adenikinju, said though he did not support going back to the pre-2023 subsidy, but agreed with Atiku that government had not been transparent and had failed to protect the poor.
“Atiku has some points on its side. One is that it has come to the public notice that the Nigerian National Petroleum Company Limited (NNPC) is still claiming some amount of money for what they call economic stability or energy security, which runs also into a lot of money. That has to be defined,” Adenikinju said.
He called on NNPC to clarify if other forms of subsidy still exist and to explain the “energy security” allocation.
Adenikinju, a long-time advocate of subsidy removal, said the old regime destroyed refineries, pipelines and depots and fueled corruption.
“All my professional life, I have argued for the withdrawal of subsidy… We don’t have to go through that again.”
But he knocked the implementation of the subsidy removal by the current administration.
Adenikinju noted that the greatest gain from the removal was the alignment of incentives that had attracted billions in investment while the greatest failure was that Nigerians were not feeling it.
“When you withdraw the subsidy, your savings, it should not go to the general budget that you share. Because people would then not be able to see a one-to-one mapping between the subsidy removal and what government is doing to benefit their livelihoods”, he said.
The professor said the vulnerable have been abandoned, adding that what the government had done with the removal of subsidy was the failure to take care of the poor.
According to him, there was no serious mechanism to mitigate the effect on the poor.
To address this, Adenikinju suggested short-term palliatives such as discounted crude supply to Dangote and other domestic refineries to reduce pump prices of petrol and diesel and production subsidies or tax credits for manufacturers and small and medium enterprises (SMEs) battling high energy costs.
He also urged investment in mass transit and compressed natural gas (CNG) buses.
He argued that with the removal of subsidy, government revenue has increased while corruption has also increased.
He noted that the states were collecting more money but were not transmitting the effects of the high revenue to the lives of the people.
Managing Partner, The Energy Consulting Practice, Mr. Kelvin Emmanuel, went further, backing Atiku’s refinery-linked proposal as a viable alternative.
“Subsidy removal is not working because the revenue accruals from the barrels released is not been collapsed into the consolidated revenue fund,” Emmanuel said.
He explained that Atiku was not proposing the old consumption subsidy but that he was proposing a subsidy linked to domestic refining of crude oil.
Emmanuel added that the former vice president was proposing a cap of crude price under the Domestic Crude Supply Obligations (DCSO), based on the actual daily consumption of Nigeria.
Under the model, he explained that the downstream regulator would measure daily consumption and government would supply refiners crude at a capped price to insulate pump prices from external shocks.
Emmanuel argued that Nigeria can afford such kind of subsidy because “the current government has been deducting 30 per cent from the Federation Account Allocation Committee (FAAC) for more than three years, equivalent of the accruals due from removal of petrol subsidy.
He dismissed fears that investors would regard any renewed subsidy regime as a show of policy uncertainty, arguing that the subsidy being proposed by Atiku was production linked and not consumption based.
But a member of the Major Energies Marketers Association of Nigeria, MEMAN, who spoke on condition of anonymity, dismissed Atiku’s pledge as electioneering.
“It is all politics. Pure and simple. Playing to the gallery in order to win power. Politicians are never consistent. Economically it would be disastrous if we go back in that direction”, the marketer told THISDAY.
In all, the emerging consensus is clear: no return to the old subsidy that bled the treasury, but the current approach has left millions exposed to energy shocks without relief.