The Independent Media and Policy Initiative (IMPI) has warned that a campaign promise by former Vice President Atiku Abubakar to restore fuel subsidy could brand Nigeria as an unpredictable investment destination and reverse gains made in investor confidence.
In a policy statement released in Abuja and signed by its Chairman, Dr. Omoniyi Akinsiju, titled “Atiku's Fuel Subsidy Restoration Campaign Promise Fails Litmus Test of Practicability and Sustainability”, IMPI said the proposal poses serious risks to Nigeria’s economy.
IMPI said Atiku’s pledge is “all that several foreign investors need to be convinced that doing business in the country is scary, unpredictable and indeed an investor's nightmare.”
Dr. Akinsiju explained that Atiku’s proposed Economic Recovery Plan (AERP) seeks to shift subsidy from importation to production by allocating discounted domestic crude to eligible public and private refineries, on the condition that savings are passed to consumers.
He, however, described the model as “convoluted” and said it would “force commercial entities like NNPC Limited or private refineries into complex, politically mandated pricing formulas thereby undermining the noble ideals and provisions of the existing Petroleum Industry Act (PIA) of 2021.”
“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,” he said.
IMPI argued that fuel subsidies are “inherently regressive” as wealthier households with multiple vehicles consume more petrol than the poor who rely on public transport.
The think-tank also warned that fixed price caps would remove incentives for marketers to serve remote areas, pushing supplies to high-volume urban markets like Lagos, Abuja, Kano, and Port Harcourt.
According to Dr. Akinsiju, the model repeats Nigeria’s historical pattern of “deducting subsidy costs at source” from oil revenues before they reach the Federation Account, leaving states and local governments “financially crippled.”
“By giving discounted crude oil directly to local refineries, the government creates a massive hidden deduction. 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,” he stated.
IMPI said the proposal could revive black-market fuel sales, with remote filling stations running dry and transport costs rising by “up to 40% above current deregulated market rates,” thereby accelerating food inflation.
“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,” the statement added.