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• Rejects N19.1trn cost estimate • Accuses FG of fiscal scare-mongering
From Ndubuisi Orji, Abuja
The African Democratic Congress (ADC) has rejected the Presidency’s claim that Nigeria cannot afford a return to fuel subsidy, insisting that the proposal by its presidential candidate, Atiku Abubakar, is financially sustainable and fundamentally different from the previous subsidy regime.
The opposition party also challenged the Presidency to substantiate its estimate that bringing the pump price of petrol down to about N600 per litre through subsidy could cost the country approximately N19.1 trillion annually.
ADC National Publicity Secretary, Bolaji Abdullahi, in a statement, yesterday, described the figure as “phantom” and accused the Presidency of “fiscal scare-mongering” in its attempt to discredit Atiku’s proposal.
Atiku and the Presidency have been locked in a war of words over the former Vice President’s pledge to restore a form of fuel subsidy if elected President in 2027.
President Bola Tinubu had, in his inaugural address on May 29, 2023, declared an end to the petrol subsidy regime, triggering a sharp rise in pump prices and transportation costs.
But the ADC said the argument that Nigeria could not afford Atiku’s proposed intervention was based on assumptions that did not reflect the model being advocated by its presidential candidate.
“We are at a loss how the Presidency conjured up this phantom figure. But we do not agree with it. In trying to discredit Atiku’s proposal as unrealistic, the President’s men fail to address its fundamental principle, which is that Nigerians cannot afford the cost of unsubsidised fuel,” the party said.
It accused the Presidency of constructing a hypothetical subsidy model based on crude oil at $80 per barrel and a $40-per-barrel subsidy differential and then presenting the resulting N19.1 trillion estimate as the cost of Atiku’s proposal.
“Instead, they construct a hypothetical $40-per-barrel subsidy scenario, extrapolate it to an annual figure of N19.1 trillion and then attack that figure. That is classic straw man argument — the Presidency attacking the model it created by itself, and passing it off as an attack on the opponent’s position,” ADC said.
According to the party, the Presidency had acknowledged that its calculation rested on assumptions of about $80 per barrel for crude and a $40 subsidy differential.
“The ADC does not concede that implementing the AERP would cost N19.1 trillion annually, because it does not. And nothing they have said so far suggests they have proof for concluding that it does. Instead, what we see is fiscal scare-mongering,” it added.
Explaining Atiku’s proposal, the ADC said it would not involve a return to the former system of subsidising imported finished petroleum products.
Rather, it said, the proposed scheme would incentivise domestic refining through a controlled crude-feedstock mechanism based on a benchmark price and fiscal ceiling.
“At the beginning of a budget cycle, government establishes a benchmark crude price consistent with the targeted maximum domestic petroleum-product price. If the market price of crude is at or below that benchmark, there is no subsidy.
“If the market price rises above the benchmark, the intervention covers only the qualifying upward differential, subject to an approved fiscal ceiling. That is not a permanent $40-per-barrel entitlement,” it explained.
The party said the Presidency could therefore not apply a $40 differential to an assumed volume of crude and present the resulting figure as the annual cost of Atiku’s proposal.
ADC also challenged the Federal Government to calculate the wider economic cost of retaining the existing fuel-pricing regime.
“The government has calculated what it says the Atiku subsidy might cost. But what does the continuation of the current trajectory cost Nigeria? What is the cost of permanently high transport fares? What is the cost of higher food distribution costs? What is the cost of imported petroleum products?
“What is the cost of foreign-exchange demand? What is the cost of suppressing domestic industrial competitiveness? What is the cost of refinery under-utilisation? What is the cost of failing to build Nigeria into a regional refining hub? What is the cost to household disposable income?” it queried.
The party maintained that the economic consequences of the current policy on households, manufacturers and domestic production must be weighed against the cost of its proposed intervention.
“Doing nothing is not free. It is ultimately more expensive. The Presidency has simply failed to put a number on the cost of its preferred alternative, which is to leave citizens to fend for themselves and do nothing other than telling them to continue to endure,” ADC stated.
