IMPI Defends FG’s Fuel Price Modulation, Faults Atiku’s Subsidy Proposal
Oru Leonard
The Independent Media and Policy Initiative (IMPI) has dismissed claims that the Federal Government’s fuel price modulation plan and 30-day petrol discount initiative amount to a return to fuel subsidy, insisting that the measures differ fundamentally from the subsidy proposal previously advocated by former Vice President Atiku Abubakar.
The policy think tank maintained that the government’s intervention was designed to cushion the impact of rising international petroleum prices arising from the Middle East conflict, rather than revive the former fuel subsidy regime.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI argued that the decision by the Nigerian National Petroleum Company Limited (NNPCL), to offer a 30-day fuel price rebate at its retail outlets, alongside the price modulation mechanism, should not be equated with the government paying marketers through public funds.
The group also rejected Atiku’s suggestion that the policy represented a diluted version of his campaign proposal to introduce a budgeted production subsidy for local refineries.
Atiku had criticised the 30-day fuel price rebate as a panic-driven measure influenced by political considerations, arguing that the intervention would not address the structural causes of inflation or provide relief to motorists purchasing petrol outside NNPCL retail stations.
However, IMPI described the former vice president’s assessment as narrow, arguing that it failed to recognise the economic rationale behind the government’s approach.
The group also referenced Atiku’s earlier commendation of Germany’s 90-day fuel discount model, questioning the basis for his criticism of a similar short-term intervention in Nigeria.
According to IMPI, the Federal Government’s initiative represents a flexible, data-driven response to an international price shock, intended to moderate immediate economic pressures while allowing authorities to monitor its effects before making further adjustments.
The organisation explained that the 30-day period should not be interpreted as a fixed expiration date but as a trial window for assessing market conditions, inflationary pressures and possible disruptions within the petroleum supply chain.
It added that the period would enable the government to review the applicable price parameters, including the maximum gantry price, in response to changing economic realities.
On the allegation that the administration was restoring fuel subsidy through the backdoor, IMPI argued that the NNPCL’s decision to forgo part of its commercial retail margins was fundamentally different from a conventional subsidy arrangement.
The group said the initiative involved the national oil company selling petrol at its landing cost, rather than requiring the government to compensate marketers for the difference between regulated prices and prevailing market costs.
IMPI maintained that this distinction was important because the approach, as described by the policy group, would not create the same direct budgetary obligations or fiscal exposure associated with the previous subsidy regime.
The think tank also defended the proposed ceiling of ₦1,350 per litre at the ex-gantry or landing-cost level, describing it as a mechanism for moderating price fluctuations rather than a permanent price-control policy.
It said the arrangement would be reviewed after every 30 days using an economic formula intended to accommodate changing market conditions.
IMPI Explains Differences Between FG and Atiku’s Models
Comparing the Federal Government’s approach with Atiku’s proposed petroleum policy under the Atiku Economic Recovery Plan (AERP), IMPI said the two proposals reflected different economic philosophies for managing Nigeria’s downstream petroleum sector.
According to the organisation, the Tinubu administration’s approach relies on market-linked forward pricing and local-currency arrangements, while Atiku’s proposal would involve a government-funded production subsidy.
Under the Federal Government’s model, IMPI explained, crude oil pricing for refiners would remain linked to international market benchmarks, with arrangements involving fixed naira exchange rates or negotiated landing-cost targets intended to reduce exposure to currency-related price fluctuations.
The group argued that this approach could help secure future supply volumes and moderate retail price pressures through adjustments to commercial margins rather than direct budgetary expenditure.
In contrast, IMPI said Atiku’s proposal would require the government to recognise the difference between the economic value of crude oil and the price charged to local refineries as a production subsidy.
Under such an arrangement, the government would pay the price difference to refinery operators, subject to budgetary provisions, limits and auditing procedures.
IMPI argued that the proposed subsidy model could place significant pressure on public finances, particularly if the government had to absorb the difference between internationally determined crude oil prices and discounted domestic supply costs.
The group also raised concerns about the potential implications for Nigeria’s Federation Account, contending that selling crude oil below its economic value could reduce government revenue and increase the opportunity cost of supporting local refineries.
Concerns Over Investors and Oil Production
Beyond the fiscal implications, IMPI warned that implementing Atiku’s proposed model could create tensions with international oil companies and private-sector partners operating under joint-venture and production-sharing arrangements.
The think tank questioned how the government would secure compliance from international oil companies and other partners if they were required to supply crude oil at prices below prevailing market benchmarks.
It argued that imposing such conditions could expose the country to contractual disputes, investor uncertainty and potentially expensive international arbitration.
The organisation further warned that government-mandated discounts on crude oil could weaken investor confidence in Nigeria’s petroleum industry, particularly among companies considering new exploration and production projects.
According to IMPI, restrictive pricing arrangements in the extractive sector could discourage foreign capital, with international operators potentially redirecting exploration budgets towards jurisdictions offering more commercially predictable investment conditions.
The group said such developments could undermine efforts to expand domestic oil production and sustain investment in new oil and gas projects.
Akinsiju argued that Nigeria’s ability to attract fresh investment into the petroleum sector depended partly on maintaining a policy environment that recognised commercial realities and provided investors with confidence in the stability of contractual arrangements.
He maintained that the Federal Government’s approach was intended to manage immediate price pressures without introducing the long-term fiscal and investment risks that IMPI associated with Atiku’s proposal.
The policy group consequently urged a distinction between temporary measures designed to cushion consumers against international petroleum price shocks and a government-funded subsidy framework that could impose recurring obligations on public finances.
IMPI insisted that, while both proposals seek to address challenges in the petroleum sector, their funding mechanisms, pricing structures and potential consequences for government revenue and private investment are substantially different.
