By Alex Ter Adum, PhD
The APC Presidential Campaign Council has challenged Atiku Abubakar to explain the legal, fiscal and operational basis of his proposed production subsidy for locally refined petrol. The challenge, issued by APC-PCC spokesman Dele Alake on September 20, 2026, raises legitimate questions about the design and cost of the proposal.
But the APC statement also appears to conflate two different policy mechanisms: the former import-based petrol subsidy and Atiku’s proposed production-linked support for domestic refining.
That distinction is central to any serious assessment of the proposal.
Nigeria’s former petrol subsidy regime was principally associated with imported petroleum products. Government support effectively reduced the domestic selling price of imported fuel, creating well-known opportunities for arbitrage, diversion and fraudulent claims.
Atiku’s current proposal, as publicly described, is different. It is based on supporting the production of refined petroleum products inside Nigeria, potentially through preferentially priced crude feedstock for qualifying domestic refineries.
The objective is therefore not necessarily to subsidise imported petrol or to reproduce the old reimbursement system.
It is to reduce the cost of domestic production.
That does not make the proposal automatically sound or fiscally unimpeachable. It means, however, that it should be assessed according to its own mechanics rather than by simply attaching to it every defect associated with the former import subsidy regime.
WHAT DOES SECTION 205 OF THE PIA ACTUALLY ESTABLISH?
The APC-PCC relies heavily on Section 205(1) of the Petroleum Industry Act, which provides that wholesale and retail prices of petroleum products are to be based on unrestricted free-market pricing conditions. The NMDPRA reaffirmed this position on September 19, stating that it does not ordinarily fix pump prices or issue administrative price templates.
That is an important legal fact.
But it does not, by itself, answer every question concerning a production-side intervention.
There is a fundamental distinction between government fixing the retail price of petrol and government reducing the cost of an input used by a domestic refinery.
If a government were to prescribe a mandatory retail price contrary to the PIA’s pricing framework, the legal basis for doing so would obviously require careful examination.
But a crude-feedstock incentive is conceptually different. The question would be whether such an incentive could be established under existing law, through appropriate regulation or appropriation, or whether legislative amendment would be necessary.
That is precisely where the debate should go.
The APC-PCC has raised the question. It has not, in its statement, identified a specific provision of the PIA that expressly prohibits every form of production-linked fiscal support to domestic refining.
That distinction matters.
SECTION 109 AND DOMESTIC REFINING
The PIA already contains a Domestic Crude Supply Obligation framework under Section 109. The NUPRC reports that this framework is actively administered, with crude allocated for domestic refineries. Its 2026 Q2 report recorded 53.7 million barrels of crude and condensate supplied to local refiners, representing 97.4 percent performance against the applicable obligation. The Commission also states that the framework operates on a willing-buyer, willing-seller basis.
This is significant because it demonstrates that domestic crude supply is already embedded in Nigeria’s petroleum regulatory architecture.
It does not, by itself, establish that Atiku’s proposed subsidy is automatically authorised by Section 109.
That would be an overstatement.
What it does establish is that the legal debate cannot simply be reduced to the proposition that the PIA recognises only imported products and unrestricted retail pricing. The Act also contains a framework designed to facilitate domestic refining and domestic crude supply.
All that any new subsidy mechanism is required to do is to explain precisely how it interacts with that framework. To that extent, the AERP has demonstrated that it would only serve as a fiscal incentive to consolidate on the legal obligation of section 109 of the PIA.
THE ₦17– ₦21 TRILLION QUESTION
The APC-PCC estimates that Atiku’s proposal could cost between ₦17 trillion and ₦21 trillion annually, depending on the subsidy rate, volume covered and other assumptions.
This is precisely where the debate needs greater transparency.
A fiscal estimate is meaningful only when its assumptions are disclosed.
The public needs to know:
- the benchmark crude price;
- the proposed discount or subsidy rate;
- the maximum annual fiscal exposure;
- the quantity of crude covered;
- the qualifying refineries;
- whether the incentive applies to all refinery output or only petrol, diesel, aviation fuel, kerosene, etc;
- the mechanism for determining the consumer benefit;
- the source of funding; and
- the safeguards against fraudulent claims.
Without those variables, a ₦17 trillion or ₦21 trillion figure should be understood as a scenario estimate, rather than an established cost of the policy.
That does not mean the APC figure should be dismissed. It means the calculation should be published and independently tested.
If its assumptions are correct, Nigerians should know.
If they are excessive, Nigerians should also know.
Because the AERP proposal is based on a transparently capped and fixed cost determined and budgeted for by the National Assembly based on established parameters including the annual budgetary benchmark for crude sales.
THE SMUGGLING QUESTION
The APC-PCC argues that another subsidy could encourage smuggling.
That concern deserves serious attention.
But the relevant issue is the structure of the subsidy.
A production-linked mechanism could theoretically make eligibility conditional upon verified refinery intake, independently measured production, domestic supply obligations, audited sales and predetermined fiscal ceilings.
Such controls would not eliminate the possibility of fraud or diversion. No regulatory system can promise that.
But they could make the mechanism materially different from the old import subsidy, where the subsidy was directly associated with imported volumes and large price differentials across borders.
The policy question is therefore not simply whether subsidy creates risk.
It is where the subsidy enters the value chain, who receives it, how it is calculated and how the government verifies the resulting benefit.
ATIKU’S CHANGE OF POSITION ALSO REQUIRES CONTEXT
The APC-PCC points to Atiku’s earlier support for deregulation and his criticism of the former subsidy system.
That history is relevant.
But a change in policy position is not, by itself, evidence that a new proposal is economically invalid.
The Nigerian refining landscape has changed substantially with the emergence of large-scale domestic refining capacity.
The relevant comparison is therefore between the economic circumstances under which Atiku previously advocated deregulation and the circumstances under which he is now proposing targeted support for domestic refining.
A serious policy debate should ask whether changed refining capacity justifies a changed policy instrument.
That question cannot be answered merely by quoting an earlier statement.
DOMESTIC REFINING CHANGES THE POLICY DEBATE
Nigeria’s growing domestic refining capacity creates an important policy opportunity.
If crude produced in Nigeria can increasingly be refined in Nigeria, a larger share of the economic value chain can remain within the country.
That can potentially affect foreign-exchange demand, refinery utilisation, employment, logistics, taxation and domestic petroleum supply.
But domestic refining capacity does not automatically guarantee low petrol prices.
The cost of crude, refinery efficiency, financing, logistics, taxes, distribution margins, exchange rates, international product prices and market competition will continue to influence pump prices.
This is precisely why Atiku’s proposal requires an economic model rather than a political slogan.
The same principle applies to the government’s deregulation policy.
The relevant question is not whether deregulation is inherently good or bad.
It is whether the prevailing market structure is delivering affordable, reliable and competitive petroleum products to Nigerian consumers.
THE QUESTIONS ATIKU SHOULD ANSWER
The APC-PCC has identified questions that Atiku should answer comprehensively.
He should publish a detailed policy document specifying:
- the precise subsidy formula;
- the crude-price benchmark;
- the maximum subsidy or discount;
- the annual fiscal ceiling;
- the volume covered;
- the qualifying refineries;
- the verification mechanism;
- the domestic-supply requirement;
- the mechanism for transmitting savings to consumers;
- the funding source;
- the anti-fraud and anti-diversion framework; and
- the precise legal and regulatory instruments required.
Those questions are legitimate.
But they should be treated as questions of policy design and implementation, not automatically as proof that the proposal is unlawful or unworkable.
WHAT THE APC-PCC SHOULD ALSO ESTABLISH
The same standard of scrutiny should apply to the APC’s objections.
If the APC-PCC contends that the proposal is unlawful, it should identify the precise statutory provision that prohibits the proposed production-side fiscal incentive mechanism.
If it contends that the proposal will cost ₦17 trillion or ₦21 trillion, it should publish the complete calculation and assumptions.
If it contends that the proposal will necessarily increase smuggling, it should demonstrate the mechanism by which a production-linked crude incentive would recreate the arbitrage associated with the former import subsidy.
And if it contends that domestic refinery support cannot reduce consumer prices, it should provide the economic analysis supporting that conclusion.
That would elevate the debate from political accusation to policy examination.
THE REAL ISSUE IS DESIGN
There is a legitimate debate to be had over whether Nigeria should use public resources to support petroleum production after the removal of the former petrol subsidy.
There are legitimate arguments concerning fiscal sustainability, market distortion, regulatory capture and the danger of recreating subsidy dependence.
There are also legitimate arguments concerning domestic refining, energy security, foreign-exchange conservation and the possibility of using targeted production incentives to lower domestic production costs.
Neither side should be allowed to settle those questions with slogans.
A poorly designed production subsidy could become another expensive and opaque intervention.
A carefully designed and fiscally capped production incentive could operate very differently from the old import subsidy.
The determining factors are therefore the design, legal authority, cost, transparency, verification mechanism and measurable consumer benefit.
CONCLUSION
The APC-PCC is right to demand that Atiku explain the legal, fiscal and operational details of his production-subsidy proposal.
Atiku should provide those details.
But the APC’s own argument requires the same level of precision.
Section 205 establishes market-based petroleum pricing. The NMDPRA has confirmed that position.
At the same time, the PIA contains a domestic crude-supply framework, and the NUPRC is already implementing that framework to support domestic refiners.
The existence of market-based retail pricing therefore does not, by itself, answer every question concerning a possible production-side intervention.
The central issue is whether Atiku can present a legally compliant, fiscally sustainable and transparently administered mechanism that reduces the cost of domestic refining and passes a measurable portion of that benefit to Nigerian consumers.
That proposition can – and should – be tested.
But it should be tested on the policy actually proposed, not the one invented.
The old import subsidy, the new production-subsidy proposal, and the existing PIA pricing framework are three related but distinct questions.
Nigeria deserves a debate that keeps them distinct.
The 2027 petroleum-policy debate should therefore move beyond the politics of the word “subsidy” and into the economics of who pays, who benefits, how much it costs, how it is controlled and whether Nigerian consumers actually see the benefit at the pump.
-AA MOVEMENT-
