The Independent Media and Policy Initiative (IMPI) has dismissed claims that the Federal Government’s fuel price modulation plan amounts to a return to subsidy, insisting that the policy is fundamentally different from the production subsidy proposed by former Vice President Atiku Abubakar.
The policy think tank said the government’s 30-day fuel discount at Nigerian National Petroleum Company Limited (NNPCL) retail outlets and its price modulation mechanism were designed to cushion Nigerians against global oil price shocks without imposing additional pressure on public finances.
In a policy statement signed by its Chairman, Dr Omoniyi Akinsiju, IMPI argued that the measures should not be confused with the costly fuel subsidy regime that the country abandoned.
The group was responding to Atiku’s criticism of the government’s 30-day fuel price rebate, which the former vice president reportedly described as a “panic-driven stunt” timed around political cycles.
Atiku had also questioned the policy’s capacity to address structural inflation and provide relief to motorists who purchase petrol outside NNPCL retail stations.
However, IMPI described his position as a narrow interpretation of the policy, arguing that the 30-day period was intended as a controlled trial to assess market conditions and determine whether adjustments were necessary.
According to the group, the government could use the period to monitor inflationary pressures, prevent consumer panic, track supply-chain leakages and review maximum gantry prices in response to prevailing market conditions.
It maintained that the arrangement was not necessarily designed to expire after 30 days but could be reviewed based on its impact.
“The policy is an agile, data-driven intervention designed to act as a shock absorber against a severe global price spike, rather than a return to a broken subsidy system,” the statement said.
IMPI also rejected the suggestion that the government was reintroducing fuel subsidy through the backdoor, explaining that the NNPCL discount involved the national oil company foregoing commercial retail profit margins to sell petrol at landing cost.
The group contrasted this with a conventional subsidy arrangement, under which government would use public funds to compensate marketers for the difference between regulated prices and actual costs.
It said the government’s proposed N1,350-per-litre ceiling on petrol landing or ex-gantry costs should be understood as a price-smoothing mechanism rather than a permanent price control.
The mechanism, according to IMPI, would be reviewed every 30 days using an economic formula.
Comparing the policy with Atiku’s proposal under his Atiku Economic Recovery Plan, the think tank said the two approaches reflected different economic philosophies.
It explained that the Federal Government’s model relied on market-linked forward pricing and local currency arrangements intended to smooth exchange-rate mismatches and secure future crude oil volumes.
“Under Atiku’s proposal, however, the government would provide an explicitly budgeted and audited production subsidy to refinery owners to cover the gap between the cost of production and the targeted price,” it said.
IMPI warned that such an arrangement could impose significant fiscal costs on the Federation Account, particularly if crude oil were supplied to refiners below its true economic value.
The group also questioned how the government would compel international oil companies and private joint-venture partners to sell their equity crude at government-mandated discounts without triggering contractual disputes, investor flight or international arbitration.
It argued that forcing oil producers to accept below-market prices could undermine investor confidence and discourage investment in new oil and gas projects.
“Rather than expanding production, global operators tend to divert their deep-water exploration budgets to more market-friendly environments, leaving local fields underfunded and structurally stagnant,” Akinsiju said.
The think tank further attributed Nigeria’s previous difficulties in securing final investment decisions on new oil and gas projects to an investment environment it considered unfavourable, arguing that the Tinubu administration had helped change that situation.
IMPI maintained that the government’s current approach offered a way to respond to international oil market volatility while limiting direct demands on public finances, whereas Atiku’s proposed model would require explicit budgetary commitments.
The group insisted that the distinction between the two policies was critical to understanding their potential implications for fuel prices, government revenue and investment in Nigeria’s petroleum industry.
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