Fuel Subsidy: Between Economic Orthodoxy, Political Convenience And The Nigerian’s Right To Survive
WHY ATIKU’S POSITION DESERVES A SECOND LOOK – AND WHY PETER OBI’S ARGUMENT FALLS SHORT
The renewed debate over Nigeria’s fuel subsidy has exposed more than a disagreement between two presidential candidates. It has reopened one of the most consequential economic and political questions in contemporary Nigeria. Should government continue to insist that Nigerians must bear the full market price of petrol, or should the state intervene to make energy affordable while the country builds a more productive and sustainable economy?
Former Vice-President and 2027 presidential candidate of the African Democratic Congress (ADC), Atiku Abubakar, has said he would restore a form of petrol subsidy if elected. Peter Obi, presidential candidate of the Nigeria Democratic Congress (NDC), has rejected that position, insisting that subsidy removal was necessary and that the real problem was the mismanagement of the resources supposedly saved from its removal.
At first glance, Obi’s argument sounds economically orthodox. Government should not waste scarce resources subsidising consumption, he argues; instead, the savings should be invested in productive sectors. There is considerable merit in that proposition.
But politics is not an examination in economic orthodoxy. Politics is about the allocation of scarce resources, the distribution of costs and benefits, and, above all, the welfare of citizens.
It is from this perspective that Atiku’s position deserves much more serious consideration than the shallow dismissive reaction it has received.
The Politics Behind the Subsidy Debate
For decades, fuel subsidy in Nigeria has been both an economic intervention and a political instrument.
The old subsidy regime undoubtedly created enormous opportunities for corruption. Inflated import volumes, questionable pricing, phantom transactions, politically connected importers and weak verification mechanisms turned subsidy administration into a notorious drain on public resources. Nobody should romanticise that system.
The problem, however, was not necessarily the principle of protecting citizens from excessive energy costs. The problem was the way the policy was designed and administered. That distinction is fundamental.
A subsidy can be corrupt. A subsidy can also be transparent. A subsidy can disproportionately benefit the rich. A subsidy can also be deliberately designed to protect the poor, workers, farmers, manufacturers, transport operators and small businesses.
Therefore, the correct question is not simply:
“Should Nigeria have fuel subsidy?”
The more intelligent question is:
“What kind of energy-support system can Nigeria afford, how should it be targeted, who should benefit from it, and how can corruption be prevented?”
That is where the Atiku proposition becomes politically significant.
Atiku Has Identified the Most Important Question: Who Pays for Economic Reform?
The removal of subsidy was presented to Nigerians as an economic necessity. Nigerians were told that government would save enormous sums and redirect those resources towards infrastructure, social protection, health, education, employment and other productive investments.
But what happened to the ordinary Nigerian?
Fuel prices increased dramatically. Transportation costs rose. Food distribution became more expensive. Production costs increased. Small businesses struggled with energy costs. Workers lost purchasing power.
The government has reported that subsidy removal generated about N15.8 trillion in additional resources for the Federation between June 2023 and December 2025, distributed across the federal, state and local governments. Yet questions remain about how those resources have translated into measurable improvements in citizens’ living conditions.
This is precisely where Atiku’s intervention becomes politically powerful.
If government can tell Nigerians that subsidy removal was necessary because the country could no longer afford subsidising petrol, Nigerians are equally entitled to ask:
Can the country afford to subsidise everything else while millions of citizens cannot afford transportation, food and basic living expenses?
Economic reform cannot become an excuse for transferring the entire burden of adjustment to the poorest citizens.
Why Atiku’s Position Is Directionally Right
It is important to be precise here. Atiku’s position should not be interpreted as a demand to resurrect the corrupt subsidy regime of the past.
His campaign has subsequently described the proposal as an affordability plan involving domestic refining and government intervention, rather than a simple return to the old import-dependent subsidy arrangement. The proposal reportedly envisages making crude available to domestic refineries at a fair price so that refined petroleum products can be produced more cheaply for Nigerians. The distinction is clear and crucial.
Nigeria’s petroleum economy is changing. With increasing domestic refining capacity, especially the emergence of large-scale local refining, the country has an opportunity to redesign fuel affordability around domestic production rather than petroleum importation. This is potentially a far more sensible approach than the old subsidy model.
Government could intervene upstream by ensuring that domestic refineries obtain crude at competitive prices, reduce unnecessary logistics and foreign-exchange costs, and create conditions under which the resulting efficiency is passed on to consumers.
That is not necessarily the same thing as writing blank cheques to fuel importers.
Indeed, Atiku’s objective is to subsidise productivity and affordability, not corruption.
The Corruption Argument Against Atiku Is Not Sufficient
The strongest criticism of Atiku’s proposal is that subsidy was historically associated with corruption. That criticism is legitimate, but incomplete.
The solution to corruption is not necessarily to abandon every policy that has been corrupted.
If Nigeria abandoned every government programme because someone had stolen from it, there would be very little left of government. The proper response is to redesign the system.
The old subsidy arrangement was vulnerable partly because Nigeria depended heavily on imported petrol. Government had to verify quantities supposedly imported, costs claimed by importers, and the actual volume distributed. This process created enormous opportunities for manipulation.
But if Nigeria increasingly produces petrol domestically, a redesigned affordability intervention could be based on verifiable domestic production, audited refinery output, transparent crude allocation and monitored distribution. The government would therefore know what it is subsidising. This is exactly Atiku’s argument, which is fundamentally different from an opaque system in which government pays unknown importers for questionable volumes.
And This Is Where Obi’s Argument Has a Weakness
Peter Obi is right about one thing – mismanagement of subsidy savings is not, by itself, an economic argument for restoring subsidy. That is a sound principle.
But Obi’s position becomes problematic when it treats subsidy removal as though it were automatically beneficial to Nigerians, provided government invests the savings properly. That assumption is questionable.
The real issue is not simply whether the state has more fiscal space. It is whether ordinary Nigerians are better off.
A government can improve its balance sheet while households become poorer.
It can increase revenue while purchasing power declines.
It can attract investors while workers cannot afford transportation to work.
It can report fiscal savings while businesses close because energy costs have become prohibitive.
And it can celebrate macroeconomic stability while citizens experience microeconomic distress.
That is the fundamental weakness in an excessively technocratic approach to subsidy removal.
A healthy economy must ultimately be measured not only by what government saves but by what citizens can afford.
The Nigerian Economy Runs on Petrol
There is another factor that cannot be ignored.
Petrol is not merely a commodity consumed by vehicle owners. It is embedded in the Nigerian economy. It powers transportation. Transportation moves food, moves workers, moves agricultural products and moves manufactured goods.
Petrol therefore has a multiplier effect on the cost of living. When the price of petrol rises sharply, the effect travels through the entire economy.
The farmer pays more to move produce.
The trader pays more to transport goods.
The manufacturer pays more for logistics.
The commuter pays more to get to work.
The student pays more to get to school.
The family pays more for food.
The small business pays more for distribution.
Consequently, the subsidy debate cannot be reduced to whether government should artificially make petrol cheap. It is fundamentally a debate about the cost structure of the Nigerian economy.
Subsidy Removal Without a Social Contract Is Politically Dangerous
There is also a deeper political problem. Economic reforms require a social contract. If government removes a benefit that citizens have historically enjoyed, it must demonstrate clearly what citizens will receive in return.
That was one of Obi’s own criticisms of the implementation. He argued at the NBA conference that government should have provided alternatives for Nigerians while directing the savings into productive sectors. That admission actually strengthens Atiku’s argument for revisiting the policy.
Because if the removal was poorly sequenced, inadequately cushioned, and followed by questionable management of the savings, the answer cannot simply be:
“The policy was right; Nigerians should continue to endure the consequences.”
The better answer should be:
“Let us redesign the policy so that Nigerians are protected while the economy becomes more productive.”
That is much closer to the logic behind Atiku’s state intervention.
The Real Enemy Is Not Subsidy; It Is Subsidy Capture
Nigeria must stop confusing two different things:
subsidising citizens and subsidising corruption.
They are not the same. A transparent intervention that lowers the cost of locally refined petrol for millions of Nigerians is fundamentally different from an opaque regime that enriches politically connected importers. The country can therefore establish strict safeguards:
- independent auditing of every subsidy naira;
- publication of crude allocations and refinery transactions;
- electronic monitoring of refinery output;
- transparent pricing formulas;
- independent verification of production and distribution;
- periodic public disclosure of subsidy expenditure;
- prosecution for fraudulent claims;
- time limits and review mechanisms;
- and a gradual transition from subsidy to targeted energy support as domestic refining and alternative energy expand.
The answer to corrupt subsidy is not necessarily subsidy abolition. It is subsidy reform.
Atiku Must, However, Answer the Hard Questions
Supporting Atiku’s direction does not mean giving him a blank cheque.
He must tell Nigerians exactly:
How much will the intervention cost annually?
Who will qualify?
What exactly will government subsidise?
Will it be petrol at the pump, crude supplied to local refineries, transportation, or a combination of these?
What safeguards will prevent a new subsidy cartel?
How long will the intervention last?
What happens when international crude prices rise sharply?
How will domestic refineries be prevented from simply pocketing the benefit?
What percentage of the benefit will reach the final consumer?
These are not objections to Atiku’s proposal. They are the questions that can transform a political promise into a credible public policy.
The Political Difference Between Atiku and Obi
Ultimately, the disagreement reveals two different philosophies.
Obi’s position is essentially that Nigeria should remove a distortion, retain the fiscal savings, and invest the resources more productively.
Atiku’s position is that government must first recognise the immediate welfare consequences of that adjustment and intervene to make essential energy affordable while restructuring the petroleum economy.
Both positions recognise the corruption associated with the old subsidy system. But they differ on the role of the state.
Obi places greater emphasis on neo-liberalism, fiscal discipline and productive investment.
Atiku’s emerging welfarist position places greater emphasis on affordability, welfare and state intervention within a transformed domestic refining environment.
For a country where millions are struggling with the cost of food, transportation and energy, Atiku’s approach may have greater immediate social relevance.
And this is where political leadership matters.
The Nigerian Poor Cannot Eat Fiscal Savings
This may be the most important point in the entire debate.
Government cannot tell a struggling Nigerian:
“We have saved trillions of naira.”
The Nigerian will ask:
“What has that saving done for me?”
Government cannot tell a worker:
“Our fiscal position has improved.”
The worker will ask:
“Why can I no longer afford to transport myself to work?”
Government cannot tell a farmer:
“The subsidy is economically inefficient.”
The farmer will ask:
“How do I move my harvest from the farm to the market?”
These are not irrational questions.
They are the questions of citizens whose lives are affected by economic policy.
Our Verdict
Peter Obi’s argument contains an important truth: Nigeria cannot return to the corrupt, opaque and import-dependent subsidy regime of the past. But that does not automatically make permanent subsidy removal the only responsible option.
Indeed, the Nigerian experience since 2023 demonstrates the danger of treating an economically orthodox policy as inherently socially beneficial.
Atiku’s proposal deserves consideration precisely because it challenges the assumption that Nigerians must indefinitely bear the full cost of an economic transition they did not design.
The better path is neither “subsidy at all costs” nor “subsidy removal at all costs.”
It is affordable energy, domestic refining, transparent intervention, strict auditing and a clear exit strategy.
If Atiku can demonstrate that his proposal will subsidise domestic production and Nigerian consumers rather than importers and political contractors, then his position is not a return to the past. It is an attempt to correct the social imbalance created by a reform whose benefits ordinary Nigerians have not yet felt sufficiently.
Peter Obi is right to demand accountability for the subsidy savings. But he is less convincing when he appears to assume that the answer to a badly implemented subsidy removal is to maintain the removal.
Nigerians need more than fiscal arithmetic. They need an economy they can actually afford to live in.
That is why, in the present circumstances, Atiku’s direction is politically and socially more responsive to the Nigerian condition – provided that he subjects the proposal to rigorous fiscal discipline, transparency and independent public accountability.
OLA OLATEJU WRITES FROM ACHIEVERS UNIVERSITY, OWO, ONDO STATE
