By Alex Ter Adum, PhD
Okoi Obono-Obla’s central proposition is not merely overstated; it is legally unsustainable in the absolute form in which he presents it.
He takes the PIA’s commitment to market-based petroleum pricing and attempts to transform it into a statutory prohibition against every conceivable form of government intervention in the petroleum economy. That is not what the Petroleum Industry Act, 2021 says.
The PIA establishes a market-oriented pricing regime. It does not abolish the government’s regulatory, strategic, fiscal and energy-security functions. It does not prohibit Parliament from appropriating money for legitimate public purposes. It does not outlaw every form of consumer support. And it certainly does not convert the economic policy of the Tinubu administration into an immutable legal command binding every future government.
That distinction is not semantic. It is the entire issue.
SECTION 205 DOES NOT SAY WHAT OBONO-OBLA WANTS IT TO SAY
Section 205(1) provides that, subject to the provisions of the section, wholesale and retail prices of petroleum products shall be based on unrestricted free-market pricing conditions.
Fine.
But where does section 205 say:
“The Federal Government shall never again provide any fiscal assistance to consumers of petroleum products”?
Where does it say:
“No appropriation may ever be made for petroleum-related consumer support”?
Where does it say:
“Any future government that wishes to cushion consumers against an economic shock must first repeal this Act”?
It says none of these things.
Obono-Obla has therefore taken a statutory pricing rule and manufactured from it an absolute statutory prohibition which the text does not contain.
That is not statutory interpretation. It is statutory extrapolation.
Indeed, section 205 itself begins with the words “subject to the provisions of this section.” Those words matter. They tell us that the pricing principle operates within the wider regulatory architecture of the Act and is not an isolated provision capable of being read as an absolute prohibition against every form of governmental intervention.
THE PIA ITSELF DESTROYS THE THEORY OF ABSOLUTE NON-INTERVENTION
The most devastating problem with Obono-Obla’s thesis is that the PIA itself contains mechanisms through which the government can intervene in petroleum supply and impose obligations upon industry participants in pursuit of national objectives.
Consider section 109.
The PIA establishes a Domestic Crude Supply Obligation (DCSO) requiring upstream producers to dedicate crude oil for domestic refineries.
That is not a free-market arrangement in the simplistic sense in which Obono-Obla invokes “unrestricted free-market pricing.”
It is a statutory intervention in the allocation and utilisation of Nigeria’s petroleum resources.
And it is not theoretical.
The NUPRC has actually exercised the authority conferred by section 109(2) to make regulations governing production curtailment and domestic crude supply obligations. Those regulations expressly seek to ensure the utilisation of produced petroleum in relation to domestic supply and local refining.
In other words, the PIA itself recognises that national energy security and domestic refining objectives can justify regulatory intervention in the petroleum value chain.
So the proposition that the PIA somehow established a pristine, intervention-free petroleum market in which the government is legally forbidden from influencing outcomes is demonstrably false.
The PIA is a regulated market framework, not an anarchic laissez-faire statute.
THE SUPPLIER-OF-LAST-RESORT PROVISION IS ANOTHER PROBLEM
Section 317(6) is equally inconvenient for the absolutist argument.
The PIA contemplated circumstances in which the Federal Government could request NNPC to ensure adequate supply and distribution of petroleum products as supplier of last resort, with the Federation bearing the associated costs for the specified transitional period.
That provision alone demonstrates that the PIA does not operate on the simplistic premise that the government must permanently stand outside the petroleum market.
Indeed, the controversy over the precise duration and legal basis of government petroleum interventions after the transitional period only proves the real point: the legal question is always about the nature, statutory basis and design of a particular intervention, not whether the word “subsidy” has somehow become prohibited vocabulary under Nigerian law.
There is therefore a legitimate debate about whether a particular intervention is authorised, whether it requires appropriation, whether it requires statutory amendment and whether it is consistent with section 205.
But that is very different from declaring that the PIA has permanently outlawed all future subsidy-like fiscal interventions.
OBONO-OBLA CONFUSES PRICE WITH COST
The most elementary economic error in the argument is the failure to distinguish the market price of a commodity from government assistance towards the cost borne by the consumer.
Suppose petrol has a market price of ₦1,500 per litre.
The government decides to provide a transparent ₦15-per-litre support mechanism.
The market price can remain ₦1,500.
The government may simply bear ₦15 of the consumer’s economic burden through a properly authorised fiscal programme.
That is not necessarily the government fixing the market price at ₦1,485.
The distinction is critical.
Price regulation concerns the price at which the product is sold in the market.
Fiscal support concerns who ultimately bears the economic cost.
Obono-Obla treats the two as necessarily identical.
They are not.
Therefore, before declaring an AERP proposal illegal, he must establish exactly how the proposed mechanism operates.
If it mandates an administered pump price contrary to section 205, identify that conflict.
If it creates an obligation on NNPC contrary to the PIA, identify the provision.
If it requires public expenditure, identify why the National Assembly cannot appropriate it.
If it requires amendment of a particular section, identify that section.
But merely shouting “subsidy” does none of those things.
THE AERP MUST BE ATTACKED AS PROPOSED—NOT AS IMAGINED
This is where the article becomes especially vulnerable.
The AERP is not necessarily proposing a return to the old subsidy architecture characterised by opaque pricing, uncontrolled fiscal exposure and alleged abuses.
If the proposal is instead for a transparent, capped and budgeted intervention, the legal and economic analysis must address that actual architecture.
Take a hypothetical $15 cap we have similar to the $11.5 incentive granted under the Deep Offshore Assets Investment Tax Credit recently signed into law by Tinubu.
A $15 ceiling is not an invitation to unlimited spending.
It is precisely the opposite.
It establishes a maximum government exposure per defined unit of intervention.
That allows the government, Parliament and the public to calculate the potential fiscal cost.
It allows the programme to be budgeted.
It allows auditing.
It allows performance measurement.
It allows the government to terminate or modify the intervention when its economic objective has been achieved.
That is radically different from an indefinite subsidy without a fiscal ceiling.
The question should therefore be:
Is the proposed $15 intervention affordable, properly appropriated, legally structured, transparent and economically productive?
That is a legitimate debate.
But saying “the PIA prohibits subsidy” does not answer any of those questions.
WHY SHOULD NIGERIA SUBSIDISE EXTRACTION BUT NEVER SUPPORT VALUE ADDITION?
There is an even more fundamental economic contradiction in Obono-Obla’s argument.
Nigeria routinely deploys fiscal and regulatory incentives to attract investment into the petroleum industry, particularly upstream exploration and production.
Why?
Because the government recognises that incentives can alter investment behaviour and produce wider economic benefits.
So why should the principle become illegitimate when applied to domestic refining and value addition?
Why is it economically sensible to provide incentives to extract crude oil from Nigeria but supposedly irrational to provide a carefully capped intervention that accelerates the conversion of that crude into refined petroleum products within Nigeria?
Why should Nigeria’s preferred economic model be:
extract → export crude → import refined products
rather than:
extract → refine domestically → satisfy domestic demand → reduce imports → build industrial capacity → potentially export refined products?
That is the question Obono-Obla does not answer.
If a temporary and capped intervention helps Nigeria build a domestic refining ecosystem capable of eliminating dependence on imported petroleum products and ultimately producing a surplus for export, then its economic value cannot be assessed merely by asking how much the intervention costs.
One must ask what structural economic transformation it produces.
THE PIA ITSELF SUPPORTS DOMESTIC REFINING OBJECTIVES
This is precisely why section 109 is so important.
The PIA’s Domestic Crude Supply Obligation is specifically designed to ensure that domestic refineries have access to crude.
The NUPRC has explained that section 109 mandates domestic crude supply obligations on petroleum-mining lease and oil-mining lease holders to ensure crude supply to local refineries. The Commission subsequently developed regulatory mechanisms under section 109(2) to implement that obligation.
So the PIA itself recognises that leaving every petroleum transaction entirely to unrestricted market forces is not sufficient to achieve Nigeria’s strategic energy security objectives.
The law therefore combines:
market-based pricing;
regulation;
domestic supply obligations;
energy-security objectives;
investment promotion;
local refining objectives; and
carefully defined government intervention.
That is the actual architecture.
It is much more sophisticated than the caricature presented in Obono-Obla’s article.
THE PIA IS A STATUTE, NOT A CONSTITUTIONAL INJUNCTION AGAINST POLICY CHANGE
There is another fundamental error.
Obono-Obla suggests that because subsidy removal was implemented under the PIA framework, a future government cannot reverse or modify the policy without amending the Act.
That proposition requires qualification.
If a future government seeks to restore the precise old administered-price regime in a manner directly inconsistent with section 205, then, yes, the government would have to confront the statutory restriction and, where necessary, seek legislative amendment.
But that is not the same thing as saying that every alternative policy supporting petroleum consumers requires amendment of the PIA.
Nor can a policy implemented by one elected administration acquire the status of an immutable national economic doctrine.
The PIA is an Act of the National Assembly.
It is not the Constitution.
It does not extinguish Parliament’s legislative authority.
It does not prevent future governments from proposing new economic policies.
And it certainly does not prevent Nigerians from voting for a presidential candidate whose economic programme differs from that of the incumbent administration.
THIS IS WHY THE AERP DEBATE SHOULD BE ABOUT DESIGN
The proper challenge to the AERP is therefore straightforward.
If it is too expensive, show the numbers.
If the hypothetical $15 cap for instance, is fiscally unsustainable, demonstrate why.
If the funding mechanism is unlawful, concretely identify the statutory provision and the full weight of its implication.
If it constitutes disguised price fixing, explain how.
If it requires legislative amendment, identify the precise provisions.
If it will create arbitrage, corruption or market distortion, demonstrate the mechanism and propose safeguards.
If it cannot produce the promised refining and energy-security benefits, show the evidence.
That is what an intellectually serious critic would do.
But Obono-Obla instead starts from the conclusion that “subsidy removal is law” and then treats every alternative intervention as though it were automatically illegal.
That reverses the proper legal method.
One does not determine legality by attaching a politically loaded label to a proposal.
One examines the proposal’s legal character, statutory authority, funding mechanism, regulatory effect and practical operation.
THE FINAL IRONY
The article is titled:
“SUBSIDY REMOVAL IS LAW, NOT WHIM: IGNORANCE IS NOT AN ECONOMIC POLICY.”
But there is a delicious irony here.
Subsidy removal may be the policy preference of the present administration. Market-based pricing may indeed be the governing principle under section 205. But neither proposition establishes that every future fiscal intervention in the petroleum sector is unlawful.
The PIA does not say that.
The PIA itself contains regulatory interventions.
It contains domestic crude supply obligations.
It contemplates government involvement in ensuring petroleum supply security.
It empowers regulatory institutions to make rules implementing national petroleum objectives.
And the actual implementation of section 109 has produced regulations compelling upstream producers to support domestic refining through domestic crude supply obligations.
The law therefore does not present the binary choice Obono-Obla imagines:
either absolute free-market pricing or illegal subsidy.
The actual legal architecture is considerably more nuanced:
market pricing within a regulated petroleum industry, coupled with strategic intervention where the statute authorises it and where the government pursues legitimate national objectives.
That is the law.
So let Obono-Obla make the stronger argument.
Let him demonstrate that the precise AERP mechanism violates a specific provision of the PIA.
Let him demonstrate that a properly appropriated and capped fiscal intervention necessarily constitutes unlawful price regulation.
Let him explain why the government may legally impose a domestic crude-supply obligation to support refineries but may never lawfully design a transparent fiscal mechanism to support consumers and accelerate domestic refining.
Let him prove that a hypothetical $15 cap for domestic refining is both fiscally and legally impossible, but an $11. 5 subsidy for upstream exploration is possible, rather than merely asserting that “subsidy” is impossible.
Until he does those things, he has not demolished the AERP. He has merely demolished a version of the AERP that exists principally in his own argument.
And that is the central weakness of his intervention.
He is fighting the word “subsidy” rather than engaging the policy architecture.
Nigeria’s 2027 economic debate deserves better.
The question is not whether government intervention sounds politically unfashionable.
The question is whether a particular intervention is lawful, transparent, affordable, targeted, economically rational and capable of delivering a measurable national benefit.
If the AERP can satisfy those tests, invoking section 205 as though it were a statutory prohibition against every conceivable form of fiscal intervention is not a legal knockout.
It is a straw man dressed up as a statutory interpretation.
