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

The All Progressives Congress Presidential Campaign Council has criticised former Vice-President Atiku Abubakar’s proposal for a production subsidy on locally refined petrol, warning that the policy could revive fuel smuggling and deepen the country’s fiscal challenges.

In a statement on Sunday, APC-PCC spokesman and Minister of Solid Minerals Development, Dele Alake, said Atiku had yet to provide details of the proposed subsidy’s legal framework, cost and funding mechanism.

At a press conference in Abuja on Friday, Atiku reiterated his proposal for a “production subsidy” on locally refined petrol, saying the measure would help reduce pump prices.

He also called on President Bola Tinubu to lower the retail prices of petrol and diesel.

Reacting, Alake argued that the proposal could undermine the deregulated downstream petroleum sector and impose fresh financial obligations on the Federal Government.

He also questioned how preferential pricing of crude for domestic refiners would translate into lower petrol prices for consumers, arguing that any discount on crude supplied to refiners would reduce revenue accruing to the Federation.

The APC-PCC said the proposal raised “important legal, fiscal and practical questions” that Atiku needed to address.

It cited Section 205(1) of the Petroleum Industry Act 2021, which provides for unrestricted free-market conditions to determine wholesale and retail prices of petroleum products.

The council also referred to a statement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which said it does not fix pump prices or issue administrative price templates except where statutory conditions for intervention are met.

The APC-PCC said Atiku should therefore explain whether refineries benefiting from the proposed subsidy would be required to sell petrol at a prescribed price.

“If the answer is yes, he should identify the legal framework under which the government would impose that price condition and explain how it would operate consistently with the Petroleum Industry Act,” the council said.

“If the answer is no, he should explain how public support to refiners would guarantee lower prices at filling stations. Without an enforceable mechanism, refiners could receive the benefit while consumers continued to pay market prices.”

Alake said while an appropriation by the National Assembly could authorise spending on the proposal, such approval would not by itself resolve the regulatory questions arising under the Petroleum Industry Act.

He challenged Atiku to state whether legislative amendments would be required to implement the proposal.

The APC-PCC also questioned the potential cost of the subsidy and how it would be financed.

“His earlier statement suggested that the intervention could take the form of preferentially priced crude for domestic refineries,” the council said.

It argued that any discount on crude supplied to domestic refiners would reduce the value accruing to the Federation and, consequently, revenue available to the federal, state and local governments.

The council further claimed that, based on publicly reported refinery throughput and domestic petrol-supply figures, the proposed intervention could cost between N17tn and N21tn annually, depending on the size of the discount, the volume covered and whether the support applied to the entire crude barrel or only to petrol sold domestically.

It stressed that the assumptions behind the estimate needed to be clearly defined.

According to the APC-PCC, Nigerians should be told the proposed subsidy rate, annual spending ceiling, volume of crude or petrol to be covered, source of funding, mechanism for guaranteeing lower pump prices, safeguards against diversion and smuggling, and whether amendments to the Petroleum Industry Act would be required.

Subsidy U-Turn?

Alake also argued that Atiku’s latest proposal was inconsistent with his previous position on downstream petroleum deregulation.

He recalled that Atiku, while speaking at Lagos Business School in November 2022, described petrol subsidy as fraudulent and pledged to complete its removal.

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Alake also cited an August 25, 2026, post by Atiku on X in which the former vice-president said, “I will restore it!”

The APC-PCC said Atiku should explain why he now favoured restoring subsidy in another form and how his proposal would avoid what it described as the abuse, scarcity, smuggling and fiscal losses associated with the previous system.

The council said deregulation of the downstream petroleum sector began under the Obasanjo-Atiku administration, noting that diesel was deregulated in June 2003 and aviation fuel subsequently moved to market pricing under the same administration.

It added that the Buhari administration deregulated kerosene in 2016, while petrol remained the major product under the old subsidy regime until its scheduled end in June 2023 under the Petroleum Industry Act.

The APC-PCC said Nigeria had spent about two decades developing the PIA, with the reform process beginning in 2000 during the first term of the administration in which Atiku served as Vice-President.

It therefore challenged him to explain how his proposed subsidy would align with the legal and regulatory framework established through that reform process.

Govt promotes alternative

The APC-PCC said the Tinubu administration had instead focused on expanding lower-cost transportation alternatives through compressed natural gas and electric mass transit.

According to the council, more than 120,000 vehicles have been converted to CNG, with thousands of additional conversions carried out privately.

It said the Federal Government was working with state governments to expand alternative-energy transport initiatives across the country.

Alake also said, following a directive from President Tinubu, Nigerians should begin to experience further reductions in transportation costs from October 1, following an agreement reached with the 36 state governors on alternative-energy transport initiatives.

According to him, commuters in seven states and the Federal Capital Territory are already benefiting from fare reductions of between 31 per cent and 83 per cent on routes served by CNG and electric buses.

The statement cited several examples, including a reported reduction in transport fares of up to 50 per cent in Adamawa State.

It also said Abia State had deployed 40 electric buses and 20 charging stations, while free CNG buses in Kaduna transported more than 1.4 million passengers in five months of 2025, saving commuters an estimated N1.39bn in fares.

“In Borno State, the services charge between ₦50 and ₦100 on routes where commercial operators charge between ₦300 and ₦600. Passengers on the Suleja–Abuja service in Niger State pay ₦550 instead of about ₦800,” the statement said.

The APC-PCC argued that the alternative-energy transport initiatives offered a different approach to reducing the impact of high transport costs.

It criticised Atiku’s proposal as a return to a subsidy-based approach, alleging that such a policy could benefit smugglers and impose additional costs on the government.

The council said the Federal Government would maintain the deregulated petroleum market, which it argued had encouraged investment in domestic refining.

It cited the Dangote Refinery, which has a stated capacity of 650,000 barrels per day, and reported that the facility processed up to 700,000 barrels per day during performance tests.

The council acknowledged the effect of high petrol prices on households, saying the Tinubu administration would continue implementing measures aimed at easing the burden.

It added that the government was working with relevant agencies to address alleged price gouging and the diversion of petroleum products across Nigeria’s borders.

The APC-PCC urged Atiku to publish a detailed policy document and provide independent legal and fiscal assessments of his proposed production subsidy.

It maintained that the proposal remained uncosted and lacked a clear legal and operational framework.