Israel Oluyemi
The Independent Media and Policy Initiative (IMPI) has warned that former Vice President Atiku Abubakar’s proposed return to fuel subsidy could reduce the revenue available to the Federation Account and weaken funding for infrastructure projects.
IMPI Chairman, Dr Omoniyi Akinsiju, gave the warning in a policy statement released in Abuja on August 25, 2026, titled, “Atiku’s Fuel Subsidy Restoration Campaign Promise Fails Litmus Test of Practicability and Sustainability.”
Akinsiju said Atiku’s proposed Economic Recovery Plan would move subsidy support from fuel importation to local production by allowing eligible Nigerian refineries to access domestic crude at discounted prices.
Under the proposal, refinery operators would receive discounted crude only if they passed the savings to consumers through lower fuel prices.
Akinsiju argued that the arrangement could reduce government revenue because discounted crude allocations would lower the value of oil proceeds flowing into the Federation Account.
“Atiku’s model repeats this exact pattern. By giving discounted crude oil directly to local refineries, the government creates a massive hidden deduction,” he said.
He said the reduction could leave state and local governments with less money for essential infrastructure and public services.
“This directly reduces the revenue flowing into the Federation Account, stripping state and local government leaders of the liquid capital needed to build rural feeder roads, primary healthcare centres and community water infrastructure,” Akinsiju said.
The IMPI chairman linked his concern to Nigeria’s previous subsidy regime, which he said involved deductions from national oil revenue before funds reached the Federation Account.
He argued that Atiku’s proposed model could recreate that pattern by replacing a direct cash subsidy with a discount on crude supplied to local refineries.
Akinsiju also questioned whether the proposed subsidy would deliver lasting relief, saying it could shift the cost of fuel support rather than eliminate it.
“Atiku’s proposal to re-regulate prices not only directly undermines the Petroleum Industry Act (PIA) 2021, but also creates an illusion of price reduction,” he said.
He further warned that fixed price caps could reduce marketers’ incentive to supply remote areas and encourage fuel distribution towards major urban centres.
“Fixed price caps remove commercial incentives for marketers to distribute fuel to remote areas; consequently, fuel supplies would shift to high-volume urban markets like Lagos, Abuja, Kano and Port Harcourt,” he said.
According to Akinsiju, supply shortages in remote areas could push consumers towards informal fuel markets and increase transportation costs.
“This pushes long-term transport fares up to 40 per cent above current deregulated market rates, accelerating food inflation in cities and leaving rural farmers with lower profits,” he said.
Akinsiju also argued that fuel subsidies tend to benefit higher-income households more because people with multiple vehicles consume more petrol than poorer Nigerians who rely mainly on public transport.
He described subsidy as a “fiscal illusion” because it moves the cost from consumers at the pump to government finances rather than eliminating the underlying expense.
Beyond the revenue concerns, IMPI said Atiku’s proposal could also affect investor confidence by introducing uncertainty into the regulatory environment established by the Petroleum Industry Act.
“Atiku’s proposal also sends signals to global markets that Nigeria lacks regulatory predictability,” Akinsiju said.
He argued that the resulting uncertainty could affect international capital and public-private partnerships required for major infrastructure projects.
Akinsiju maintained that Nigeria needs to address its infrastructure deficit without returning to fiscal policies that, in IMPI’s assessment, contributed to previous funding pressures.
“We reiterate that Nigeria’s historical infrastructure deficit cannot be solved by returning to the fiscal policies that created it,” he said.
He said Atiku’s proposed “Follow-the-Barrel” model could prioritise short-term relief at the pump while reducing the resources available for long-term investment in roads, hospitals, schools and energy infrastructure.
“This policy choice risks locking Nigeria back into the same historical cycle: prioritising temporary, popular relief at the pump, while sacrificing the high-quality roads, hospitals, schools and energy networks required to build a productive national economy,” he said.
