APC Challenges Atiku: Fuel Subsidy Proposal Violates PIA 2021

• The APC Presidential Campaign Council challenged Atiku Abubakar to explain the legal and fiscal basis of his proposed production subsidy for locally refined petrol.
• The APC-PCC questioned how the proposal would operate under the Petroleum Industry Act 2021, specifically citing Section 205(1) which mandates free-market pricing.
• The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) confirmed it does not fix petrol pump prices and no market failure has been declared.
• The estimated annual cost of Atiku's proposed subsidy could range from N17 trillion to N21 trillion, depending on various factors.
• The APC-PCC also highlighted Atiku's past statements advocating for the removal of petrol subsidies, questioning his current position.

The APC-PCC specifically demanded clarity on both the legal and financial underpinnings of the intervention, questioning how it would align with the existing Petroleum Industry Act 2021 and detailing its funding mechanism.

The All Progressives Congress Presidential Campaign Council (APC-PCC) has publicly challenged Atiku Abubakar, the presidential candidate of the African Democratic Congress, to provide a comprehensive explanation for his proposed production subsidy aimed at locally refined petrol. The APC-PCC specifically demanded clarity on both the legal and financial underpinnings of the intervention, questioning how it would align with the existing Petroleum Industry Act 2021 and detailing its funding mechanism.

This demand from the APC-PCC, articulated by its spokesman Dele Alake, the Minister of Solid Minerals Development, in a statement issued on Sunday, follows Atiku Abubakar's earlier call on Friday for President Bola Tinubu to reduce the prices of petrol and diesel. Atiku had presented the production subsidy for locally refined petroleum products as a viable strategy to achieve lower pump prices for consumers. Alake emphasized that the proposal raises significant legal, fiscal, and practical questions that require thorough answers from the former Vice President.

A central point of contention raised by the APC-PCC revolves around the Petroleum Industry Act 2021 (PIA 2021), particularly Section 205(1). This section explicitly mandates that both wholesale and retail prices for petroleum products must be determined by unrestricted free-market pricing conditions. The APC-PCC spokesman, Dele Alake, highlighted this provision, questioning how Atiku's proposed subsidy would operate consistently with such a framework.

Further complicating the matter, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued a statement on Saturday clarifying its role. The NMDPRA asserted that it does not engage in fixing petrol pump prices or issuing administrative pricing templates, reserving intervention only for situations where statutory conditions are met. The regulatory body also confirmed that no market failure, which would typically trigger such intervention, had been declared. Consequently, the APC-PCC pressed Atiku to explain whether refineries receiving the proposed subsidy would be compelled to sell petrol at a predetermined price. If so, he was asked to identify the legal framework enabling such a price condition and demonstrate its consistency with the PIA. Conversely, if no price condition were imposed, Atiku was challenged to explain how public support to refiners would genuinely guarantee lower prices for consumers at filling stations, warning that without an enforceable mechanism, refiners could benefit without passing savings to consumers, undermining the intent of the downstream petroleum regulation in Nigeria.

Beyond the legal complexities, the APC-PCC also sought detailed financial disclosures regarding Atiku Abubakar's production subsidy proposal. Alake specifically challenged Atiku to reveal the estimated cost of the intervention and outline its funding sources. The APC-PCC pointed out that Atiku had previously suggested the subsidy could involve preferentially priced crude for domestic refineries. However, the council argued that any discount on crude would inevitably diminish the value accruing to the Federation, thereby reducing revenue available to federal, state, and local governments.

Based on publicly available data concerning refinery throughput and domestic petrol supply figures, the APC-PCC estimated the potential annual cost of the new subsidy could range from N17 trillion to N21 trillion. This wide range depends on several variables, including the size of the discount, the volume of product covered, and whether the support applies to the entire barrel of crude or exclusively to petrol sold domestically. The APC-PCC demanded that Atiku clearly define the proposed subsidy rate, the annual spending ceiling, the volume of crude or petrol to be covered, the funding source, the mechanism guaranteeing lower pump prices, safeguards against diversion, smuggling, and fraudulent claims, and whether amendments to the Petroleum Industry Act 2021 would be necessary for its implementation. Furthermore, Alake questioned Atiku's current stance in light of his past advocacy for downstream deregulation, recalling his November 2022 statement at the Lagos Business School where he described the petrol subsidy system as fraudulent and pledged its complete removal, as well as an August 25, 2026 post on X where the former vice president stated, "I will restore it!" The APC-PCC spokesman urged Atiku to explain this apparent shift and how his new arrangement would avoid the abuses, scarcity, and smuggling issues associated with previous subsidy regimes.

This public challenge from the APC-PCC to Atiku Abubakar underscores a critical debate at the heart of Nigeria's energy policy and economic future. The discussion around a production subsidy for locally refined petrol, particularly its alignment with the Petroleum Industry Act 2021 and its financial implications, is paramount for ensuring Nigeria energy law compliance and sustainable market operations. The detailed questions posed by the APC-PCC highlight the need for transparency and a robust legal and fiscal framework for any proposed intervention in the petroleum sector.

For lawyers advising clients in Nigeria's energy sector, monitoring this political and legal discourse is crucial. Understanding how proposed fuel production subsidies align with or necessitate amendments to the PIA 2021, especially concerning pricing mechanisms under Section 205(1), is vital for advising on compliance, market strategy, and potential regulatory risks. The outcome of this debate will significantly influence the landscape of downstream petroleum regulation in Nigeria, impacting investors, operators, and consumers alike.

Lawyers advising clients in Nigeria's energy sector should closely monitor the political and legal debate surrounding proposed fuel production subsidies. Understanding how such proposals align with or necessitate amendments to the Petroleum Industry Act 2021, particularly regarding pricing mechanisms (Section 205(1)), is crucial for advising on compliance, market strategy, and potential regulatory risks.

Source: Original reporting via Punch