The Independent Media and Policy Initiative (IMPI) has described plans by former Vice President Atiku Abubakar to restore fuel subsidy, if elected President as a populist proposal that may create more financial and economic problems for Nigeria on the long run.
In a policy statement signed by its Chairman Dr Omoniyi Akinsiju, the think tank noted that although the proposal will initially lead to a reduction in fuel prices, it would ultimately bankrupt the country
IMPI said: “This reckless, populist proposal represents a dangerous step backwards and a financial trap that would bankrupt Nigeria, destroy the country’s sovereign credit ratings, and wipe out the economic progress made over the past three years.
“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. 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.
“This creates a long-forgotten black-market premium, with remote filling stations running dry and agricultural transport trucks forced to buy fuel from informal black-market vendors. This pushes long-term transport fares up to 40% above current deregulated market rates, accelerating food inflation in cities and leaving rural farmers with lower profits.
“Besides forcing commercial entities like NNPC Limited or private refineries into complex, politically mandated pricing formulas, Atiku’s proposal also sends signals to global markets that Nigeria lacks regulatory predictability. This policy shift would scare away international capital and freeze modern Public-Private Partnerships (PPPs), with repercussions for funding critical legacy infrastructure projects and a damning effect on production and productivity.
“We reiterate that Nigeria’s historical infrastructure deficit cannot be solved by returning to the fiscal policies that created it. Atiku Abubakar’s “Follow-the-Barrel” model replaces a cash subsidy with a crude oil revenue discount. 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.”
In the policy brief, IMPI also outlined how the Atiku plan will put the country’s sovereign credit status at risk after a relative period of stable and growth under the President Bola Tinubu administration.
“We highlight more significant threats to the country’s economic well-being by projecting international rating agencies’ likely responses to Atiku’s declaration to restore the fuel subsidy.
“We note that while a capped budget framework limits open-ended liabilities, international rating agencies like Fitch and S&P focus heavily on structural policy reversals.
“Reintroducing price controls, even under a production model, signals that Nigeria’s long-term investment rules are volatile. This policy shift would trigger sell-offs in Nigeria’s Eurobonds, spike sovereign yields, and block the country from accessing affordable global capital.
“Relatedly, the model aims to protect local refining, but price caps hurt refinery margins. Private mega-facilities like the Dangote Refinery rely on global pricing logic to service their multi-billion-dollar commercial bank loans. Forcing refineries into complex pricing formulas increases regulatory risk, endangers their cash flows and threatens a rise in Non-Performing Loans (NPLs) across the banking sector.
“On the global financing front, the World Bank and IMF evaluate actual market distortions rather than accounting labels. Because the model artificially lowers local energy prices through state intervention, it would breach the policy conditions tied to outstanding World Bank Development Policy Financing. This would freeze ongoing concessionary loan disbursements, forcing the government to fund basic public infrastructure through expensive domestic borrowing,” it added.
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