Nigeria's Presidency has rebuked former Vice President Atiku Abubakar over his pledge to reinstate fuel subsidies if he wins the upcoming presidential election.
The Special Adviser to the President on Media and Publicity, Bayo Onanuga, stated that Atiku's move reveals a shift in stance on a key aspect of his previous economic policy framework.
In a statement issued on Thursday, Onanuga said Atiku had expressed support for the removal of fuel subsidies during his 2023 election campaign, but has now changed his position in a bid to gain voter appeal.
He stated that the promise to restore subsidies would not be straightforward, as the Petroleum Industry Act (PIA) provides for the end of the fuel subsidy regime effective from the end of June 2023.
Onanuga explained that the subsidy is not a pool of funds sitting in government coffers to be distributed to the public, but rather a mechanism where the government covers the shortfall between the actual cost of fuel and the price at which it is sold to consumers.
He said that in the past, this system cost the government massive financial losses and increased dependence on debt to sustain subsidy operations.
"If the subsidy is reinstated, the question Nigerians should ask is: who will pay for it?" he said.
The presidential adviser noted that if fuel is sold below its actual cost, the government must bear the shortfall, which could reduce funds allocated to infrastructure projects and other public services, or further increase the national debt.
He also said Nigeria's petroleum sector landscape has changed significantly since the subsidy was removed, particularly due to the increase in domestic refining capacity.
According to him, the Dangote Refinery and other local refineries have boosted fuel production in Nigeria, reducing dependence on imported refined products from abroad.
Onanuga said reinstating the old subsidy system could disrupt the growth of domestic refineries and reduce investment in the sector.
He further stated that the funds the government no longer spends on subsidies have increased revenues available to the three tiers of government through the Federation Account allocation.
He noted that in July alone, the federal, state, and local governments shared nearly three trillion Naira from the Federation Account, which he cited as one of the gains of the fuel subsidy removal and foreign exchange market reforms.
However, he acknowledged that the rise in fuel prices has placed Nigerians and businesses under economic strain, particularly due to higher transportation and energy costs.
He said the Tinubu administration is working to alleviate this pressure by promoting the use of Compressed Natural Gas (CNG), which the government says could significantly reduce energy costs compared to petrol.
Onanuga said the focus should be on providing sustainable solutions that ease the burden of high energy costs for Nigerians, rather than returning to a subsidy regime that has long caused financial difficulties for the government.
He called on Atiku and other politicians advocating for subsidy reinstatement to clearly explain to Nigerians the full framework they would use to implement such a policy.
He said they should state how much the plan would cost annually, where the funds would come from, whether the government would incur new debt to finance the subsidy, and how the system would be safeguarded against corruption.
"Political promises must be accompanied by a fiscal plan that ensures their viability," Onanuga said.
He added that debates on the cost of living and economic policies are important but should be conducted based on Nigeria's current economic reality, not on the old petroleum-based economic framework.