The Independent Media and Policy Initiative (IMPI) has rejected claims that the federal government’s measures to cushion the effects of the Middle East conflict on fuel prices amount to a return of subsidy, insisting they bear no resemblance to the subsidy plan proposed by former Vice President Atiku Abubakar.
In a policy statement on Friday by its Chairman, Dr Omoniyi Akinsiju, the think tank said neither the 30-day fuel discount at NNPC Limited retail stations nor the price modulation plan marks a return to the costly subsidy regime.
It added that there was no basis for the claim by Atiku, the presidential candidate of the African Democratic Congress (ADC), that the policy is a watered-down version of his promise of a budgeted production subsidy for local refineries.
Atiku had described the 30-day fuel price rebate as a panic-driven stunt timed around political cycles. He argued that a 30-day window cannot fix structural inflation and questioned how motorists buying outside NNPC Limited stations would get relief.
IMPI called this position parochial and said it reflected a poor understanding of the policy, noting that Atiku earlier praised Germany’s 90-day, 17 cent fuel discount model.
According to the group, the policy is an agile, data-driven intervention meant to act as a shock absorber against a severe global price spike.
The group said the 30-day period is not an expiration date but a controlled trial. In its view, modern macroeconomic management requires short, iterative policy windows to monitor effects on inflation, prevent household panic and track supply chain leakages before parameters are extended or adjusted. It said this lets the government review maximum gantry prices dynamically.
IMPI also rejected the claim that the administration is bringing back subsidies through the backdoor. A traditional subsidy, it said, involves government paying marketers with public funds it does not have.
The current discount is different because NNPC Limited is simply forgoing its commercial retail margin to sell petrol at landing cost. No new debt is created, it said, and the national treasury is shielded from the multi-trillion-naira burden that would result from Atiku’s discounted crude model.
The group added that the ₦1,350 per litre ceiling on the ex-gantry or landing cost of petrol is not a frozen price control. It described it as a dynamic month-smoothing mechanism based on a strict economic formula, to be reviewed every 30 days.
Explaining how the two approaches differ, IMPI said the federal government uses a market-driven model, while Atiku’s Economic Recovery Plan (AERP) relies on a fiscally appropriated production subsidy.
Under the federal government’s model, crude is sold to refiners at international benchmark prices but converted at fixed naira rates or pre-negotiated landing cost targets, such as capping petrol at around ₦1,350 per litre.
This, it said, smooths currency conversion mismatches and secures future volumes, and treats the intervention as a margin discount rather than a direct budget expense.
Under Atiku’s model, by contrast, the price gap is recognised as a production subsidy, with the government paying the difference to refinery owners, capped and audited within the annual national budget.
IMPI warned that this model could create problems for the economy in the short and long term. It said the plan introduces a major fiscal drain disguised as industrial support, since supplying crude below its true economic value imposes a heavy opportunity cost on the Federation Account.
The group also questioned how any administration could compel international oil companies and private joint venture partners to surrender equity crude at government-mandated discounts without triggering contract breaches, investor flight or costly international arbitration.
Forcing operators in the Niger Delta to sell joint venture or Production Sharing Contract oil at state-mandated discounts would, it said, deeply damage investor confidence.
Citing history, IMPI said emerging markets that impose rigid domestic price caps on extractive resources tend to see foreign capital avoid new licensing rounds, with global operators diverting deep-water exploration budgets elsewhere and leaving local fields underfunded and stagnant.
“This is precisely why Nigeria failed to record Final Investment Decisions (FIDs) on new oil and gas projects in the past until the advent of the President Tinubu administration,” Akinsiju added.
