The Presidency, on Wednesday, accused former Vice President Atiku Abubakar of lacking a basic understanding of his own proposal to restore petrol subsidy, describing his recent pronouncements on the issue as confused, incoherent and politically motivated.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, said Atiku’s proposal to introduce what he termed a “targeted subsidy” exposed fundamental gaps in his understanding of petroleum refining economics and raised questions about the workability of the policy.
“The former Vice President is definitely suffering from a lack of basic understanding of his newfound policy prescription,” Onanuga said in a statement on Wednesday.
The Presidency particularly faulted Atiku’s argument that his proposed subsidy would “follow the barrel of crude”, noting that petrol constitutes only about 45 per cent of the products derived from a refined barrel of crude oil.
It said a barrel of crude also yields diesel, aviation fuel, kerosene, asphalt, hydrocarbon gas liquids, lubricants, waxes and raw materials used in the production of synthetic rubber, nylon, polyester and plastics.
According to the statement, diesel, which the Obasanjo-Atiku administration deregulated in 2004, accounts for roughly 25 per cent of products from a barrel, while jet fuel and kerosene account for about nine per cent.
It added that kerosene and aviation fuel had also been deregulated, questioning whether Atiku intended to subsidise the other products derived from crude or allow refineries supplied with discounted crude to make profits from the remaining 55 per cent while subsidy is concentrated on petrol.
“Will Atiku subsidise all these by-products of the barrel as well, since kerosene is used by the underprivileged to cook, and many homes and factories use diesel to power generators and delivery trucks?.
“And will he allow the refineries he will supply discounted crude oil to profit from 55 per cent of the by-products, while focusing subsidy only on petrol, his obsession?” Onanuga asked.
The Presidency said Atiku’s recent statements on petrol subsidy amounted to three different positions within one week, arguing that the contradictions raised questions about whether he was advancing a serious economic policy or merely playing politics with the economic difficulties facing Nigerians.
It recalled that Atiku’s spokesperson, Paul Ibe, had initially said the former Vice-President would restore petrol subsidy if elected president and subsequently phase it out, describing the proposed measure as a temporary intervention to allow Nigerians and businesses to recover.
According to the statement, another senior aide to Atiku, Phrank Shaibu, later rejected Ibe’s account as an “unauthorised and misleading characterisation” of the former Vice President’s position.
Shaibu, it said, explained that Atiku would not impose a predetermined date for terminating the subsidy but would retain it until domestic refining capacity expanded, supply stabilised, competition deepened and market conditions could guarantee affordable prices without government support.
The Presidency said Atiku subsequently intervened and insisted that his position “has not changed,” while reaffirming that he would restore a “targeted subsidy” if elected president.
“I will restore targeted subsidy and put purchasing power back in the hands of Nigerians”, the former Vice-President was quoted as saying.
Onanuga said the sequence of explanations amounted to a serious policy contradiction rather than a disagreement over semantics.
“If Atiku’s position has not changed, why did one of his principal aides say the subsidy would be temporary and phased out? Why did another senior aide have to publicly disown that explanation and introduce a completely different framework based on market conditions? And why did Atiku then step in to reaffirm the original position?
“Nigerians deserve clarity, not policy by trial and error,” he said.
The Presidency also challenged the economic assumptions underpinning the proposal, arguing that petrol prices could not be made cheap merely through government subsidy or increased competition.
It said pump prices are influenced by international crude oil prices, exchange rates, refining costs, transportation, distribution and other market-related costs.
According to Onanuga, while competition could improve efficiency and margins in the downstream petroleum sector, it could not completely shield Nigeria from fluctuations in global crude oil prices and other input costs.
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The Presidency also faulted Atiku’s argument linking petrol prices directly to the cost-of-living crisis, saying the causes of food inflation were more complex.
Atiku had argued that increases in fuel prices translate into higher transport costs, which subsequently push up food prices and deepen hardship among families.
While acknowledging that energy and transportation costs affect food prices, Onanuga said Nigerians had experienced rising food prices even when petrol subsidy was in place.
He identified agricultural productivity, insecurity, exchange rates, logistics, storage, flooding, input costs, money supply and supply constraints as some of the other factors influencing food prices.
“A serious economic programme must address these factors, as President Bola Ahmed Tinubu has been doing for the past three years, rather than reduce the entire cost-of-living crisis to petrol prices”, the statement said.
The Presidency consequently challenged Atiku to provide details of the proposed “targeted subsidy”, including its projected cost, beneficiaries, identification mechanism, funding source and the economic conditions that would determine its termination.
It warned against returning the country to what it described as an opaque and potentially costly subsidy regime under a different name.
According to Onanuga, Atiku must demonstrate whether he has “a coherent, costed, and workable petroleum policy” or is merely playing politics with a policy whose removal, the Presidency said, had significantly improved the fiscal health of the federal, state and local governments and helped stabilise the macroeconomic environment.
“The economy is too serious for policy somersaults, incoherence, destructive populism and election gimmicks,” the Presidency said.
It warned against returning the country to what it described as an opaque and potentially costly subsidy regime under a different name.
According to Onanuga, Atiku must demonstrate whether he has “a coherent, costed, and workable petroleum policy” or is merely playing politics with a policy whose removal, the Presidency said, had significantly improved the fiscal health of the federal, state and local governments and helped stabilise the macroeconomic environment.
“The economy is too serious for policy somersaults, incoherence, destructive populism and election gimmicks”, the Presidency said.